Categories: Business

PenCom Okays Use of RSA Balance for Mortgage

The National Pension Commission (PenCom) yesterday said it has approved the issuance and immediate implementation of the Guidelines on Accessing Retirement Savings Account (RSA) balance towards payment of equity contribution for residential mortgages by RSA holders.

The commission said the approval is in line with Section 89 (2) of the Pension Reform Act 2014 (PRA 2014), which allows RSA holders to use a portion of their RSA balance towards payment of equity for residential mortgages.

PenCom, in a statement, therefore, urged interested RSA holders to contact their PFAs for more information and guidance.

The guidelines cover pension contributors in active employment, either as a salaried employee or as a self-employed person.

According to the commission, interested RSA holders (applicants) must among other things have an offer Letter for the property duly signed by the property owner and verified by the mortgage lender.

The RSA of the applicant shall have both employer and employee’s mandatory contributions for a cumulative minimum period of 60 months (five years).

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It further stipulated that a contributor under the Micro Pension Plan (MPP) is also eligible, provided he/she has made contributions for at least 60 months (five years) prior to the date of his/her application.

RSA holders that have less than three years to retirement are not eligible, according to the guidelines.

Also, married couples, who are RSA holders, are eligible to make a joint application, subject to individually satisfying the eligibility requirements.

In addition, RSA holders, if registered before 1 July 2019, must have their records updated through the RSA data recapture exercise while application for equity contribution for residential mortgage shall be in person and not by proxy.

The maximum amount to be withdrawn shall be 25 per cent of the total mandatory RSA balance as at the date of application, irrespective of the value of equity contribution required by the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.

It said where 25 per cent of a contributor’s RSA balance is not sufficient for payment as equity contribution, RSA holders may utilise the contingency portion of their voluntary contributions (if any).

PenCom further clarified that to qualify as a Mortgage Lender for this purpose, the company must be licensed by the Central Bank of Nigeria (CBN), comply with the Contributory Pension Scheme (CPS) and have a valid Pension Clearance Certificate (PCC).

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