‘How you can use your pension savings for mortgage’

The National Pension Commission (PenCom) and the Pension Operators Association of Nigeria (PenOp) have explained how Retirement Savings Account holders can leverage their pension contributions as equity contribution on a residential mortgage.

The Head of the Investment Department, PenCom, Ibrahim Kangiwa, said for contributors under the Contributory Pension Scheme (CPS) to be eligible to use their RSA balance for the acquisition of residential mortgages, they must have contributed for five years (60 months) cumulative of employer and employee’s mandatory contributions.

He said the same thing was applicable to contributors under the Micro Pension Plan (MPP), adding that married couples, who individually met the eligibility criteria, were also eligible.

He spoke during the 2022 seminar organised by PenOp for journalists in Lagos.

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The seminar was themed “Pension: An Opportunity to Own Your Own Home, An X-Ray of the New RSA Plan On Home Ownership”.

On the authorised limit for equity contribution that qualifies a contributor, he said the maximum allowed was 25 per cent of the RSA balance, noting that “where 25 per cent of RSA balance is more than equity contribution, the RSA holder can only access the amount equivalent to equity contribution required.

“Where 25 per cent is not sufficient for equity contribution, RSA holder may utilise Voluntary Contribution (VC) in line with the Voluntary Contribution guidelines,” he explained.

Kangiwa stated further, “Where 25 per cent is not sufficient for equity contribution, Micro Pension (MP) contributor may utilise contingency portion in line with MP guidelines.

“Where 25 per cent is insufficient as equity contribution, RSA holder shall deposit the difference with the mortgage lender.”

Those exempted from this initiative, he said, included RSA holders that have less than three years to retirement; existing retirees on CPS; exempted persons under the PRA 2014 and RSA holders who do not have both employer and employee’s mandatory contributions for a cumulative minimum period of 60 months.

The President, PenOp/Managing Director, Stanbic IBTC Pension Managers, Olumide Oyetan, emphasised the need for stakeholders to work together to ensure the successful implementation of the guidelines.