By Favour Nnabugwu
The National Pension Commission (PenCom) and the Pension Operators Association of Nigeria (PenOp) have set the ball rolling for the Retirement Savings Account holders to access their equity contributions for the acquisition of residential mortgage.
At the seminar for Nigerian Association of Insurance and Pension Editors, NAIPE organised by PenOp themed: “Pension: An Opportunity to Own Your Own Home, An X-Ray of the New RSA Plan On Home Ownership, revealed that RSA holder should have contributed for five years (60 months) cumulative of employer and employee’s mandatory contributions.
Presenting the theme paper, the Head of Investment Department, PenCom, Ibrahim Kangiwa, said for contributors under the Contributory Pension Scheme (CPS) to be eligible to use their RSA balance for acquisition of residential mortgages said five contribution is needed to access residential mortgage.
Kangiwa said the same thing was applicable to the contributors under the Micro Pension Plan (MPP), adding that married couples, who individually met the eligibility criteria, are also eligible.
On the authorised limit for equity contribution that qualifies a contributor, Kangiwa put the maximum allowed at 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.
To make it easier for RSAs to acquire their own house, he further said, “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,” Kangiwa explained.
Those exempted from this initiative, according to Kangiwa, include 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.
He said that equity contribution was not for refinancing existing mortgage, outright purchase of property and purchase of land, noting that the property shall be for residential purpose only.
Kangiwa said the objective of the initiative was to provide housing for first time home owners and improve the standard of living of RSA holders under the CPS by facilitating their ownership of residential homes during their working life.
PenCom guidelines states that
Application for equity contribution for residential mortgage shall be in person and not by proxy.”
On the maximum withdrawal percentage, PenCom said this must be 25 per cent of the total mandatory RSA balance as at the date of application, irrespective of the value of equity contribution required by the mortgage lender.
Earlier in his remarks, the President, PenOp/Managing Director, Stanbic IBTC Pension Managers, Olumide Oyetan, emphasised the need for stakeholders to work together to ensure the successful implementation the guidelines.
He said the successful implementation of this initiative would improve people’s welfare and move the country forward.
to qualify for the mortgage,