How to use your pensions for a mortgage

NIKE POPOOLA explains how a worker can use part of the balance of the retirement savings account with pension fund operators for the payment of the capital contribution for the residential mortgage

The National Pensions Commission has recently approved guidelines for accessing the Retirement Savings Account balance for the payment of residential mortgage capital contribution by RSA holders.< /p>

The approval was in line with section 89(2) of the Pensions Reform Act 2014, which allows RSA holders to use part of their RSA balance for payment home mortgage equity.

PenCom has however specified the conditions for accessing the funds. A major condition is that the candidate be active, either as an employee or as a self-employed person.

He said the request for capital contribution for a residential mortgage must be made in person and not by proxy.

How to apply

Anyone interested can contact their PFA for an explanation of the process. The PFA will print the account statement and determine the 25%.

Speaking to our correspondent, PenCom spokesman Abdulqadir Dahiru said: "Then when you have that, you can now go back to your mortgage lender, get a letter of offer of your property, go through their own due diligence to accept that they finance because the pension only gives you 25%; 75% will still be financed by someone.

"This person must give you a loan offer letter that they are ready to finance you, and this is the equity contribution that you must bring. So, if you have this capital contribution with this letter of offer, which has been validated by the mortgage lender, that is when you can go to your PFA to ask for your 25%."

PenCom has stated that the maximum amount to be withdrawn is 25% of the total balance of the mandatory RSA on the date of application, regardless of the value of the capital contribution required by the mortgage lender .

When 25% of a contributor's RSA balance is not sufficient for payment as a capital contribution, RSA holders can use the unforeseen portion of their voluntary contributions (if any) .

If a person had accessed some of the funds before either to leave gainful employment before retirement age, they will still receive a lump sum upon retirement. He can still get some of the funds for the mortgage after meeting the specific conditions set out in the guidelines, but he must sign a consent form to get it.

Dahiru said, "If you took 25% for temporary job loss, then you get a job, keep contributing, and come and claim a mortgage, you'll sign a consent to say that I am fully aware that this money that I want to withdraw to finance a house will affect the amount that I could probably retire, I understand and whatever.

"So basically you're compensating the PFA that you understand so that when you retire, if your benefit is lower than your colleagues, you won't complain." mortgage lender

To qualify as a mortgage lender for this purpose, the company must be licensed by the Central Bank of Nigeria, comply with the contributory pension scheme and have a valid pension certificate as per PenCom guidelines. Eligibility

According to PenCom, a worker must have an offer letter for the property duly signed by the landlord and verified by the mortgage lender. The applicant's RSA must be contributory by both employer and employee for a minimum cumulative period of 60 months (five years). A contributor to the Micro Pension Plan is also eligible, provided they have contributed for at least 60 months (five years) prior to their application date.

RSA holders who have less than three years before retirement are not eligible.

Dahiru explained, "If I'm an employee and I work in an organization where the retirement age is 55, if I'm 50 or 51, I can qualify because that I have five years or more than three years to retire. But once I get to 52, that means I have three years that I can't access."

Per PenCom guidelines, married couples who hold RSA are eligible to apply jointly, provided they individually meet the eligibility requirements.

RSA holders, if registered before July 1, 2019, must have ...