Pension Fund Mortgage Initiative Gains Traction: N14.83 Billion Approved for 1,371 Contributors
A pioneering initiative allowing pension contributors to utilize a portion of their Retirement Savings Account (RSA) balance for residential mortgages in Nigeria has gained significant momentum. According to data from the Pension Fund Operators Association of Nigeria (PenOp), as of the end of November, 1,371 contributors successfully secured approval for residential mortgage financing valued at N14.83 billion. This surge follows the recent adoption of guidelines by the National Pension Commission, allowing contributors to access a portion of their RSA balance for mortgage equity contributions.
Key Points:
- Initiative Background: In September 2022, the National Pension Commission approved guidelines enabling Retirement Savings Account (RSA) holders to use a portion of their balances for residential mortgage equity contributions. This initiative aligns with section 89 (2) of the Pension Reform Act 2014.
- Rapid Adoption: The number of contributors approved for mortgage financing rose from 13 in March, with a value of N130.25 million, to 1,371 by November, with a combined financing value of N14.83 billion. This remarkable increase signifies the positive impact of the initiative on encouraging more RSA holders to participate in the Contributory Pension Scheme (CPS).
- Conditions for Eligibility: To be eligible for using their RSA balance for residential mortgages, contributors must have accumulated five years (60 months) of cumulative employer and employee mandatory contributions. This eligibility criterion applies to both the Contributory Pension Scheme (CPS) and the Micro Pension Plan (MPP). Married couples meeting individual eligibility criteria are also eligible.
- Authorized Limits: The maximum allowed equity contribution is set at 25% of the RSA balance. Where 25% is insufficient, contributors may utilize Voluntary Contribution or contingency portions as per the guidelines. The initiative aims to facilitate first-time homeownership and enhance the living standards of RSA holders under the CPS.
- Exemptions: Contributors exempted from the initiative include those with less than three years to retirement, existing retirees on CPS, individuals exempted under the PRA 2014, and RSA holders without 60 months of cumulative employer and employee mandatory contributions.
- Objective of the Initiative: The primary objective of the initiative is to provide housing opportunities for first-time homeowners and improve the standard of living for RSA holders under the CPS. It focuses on facilitating residential home ownership during contributors’ working lives.
Conclusion: The substantial approval of mortgage financing for 1,371 contributors under the pension fund mortgage initiative highlights its positive impact on encouraging homeownership among RSA holders in Nigeria. As the initiative gains traction, it contributes to the broader goal of improving living standards and financial well-being for individuals participating in the Contributory Pension Scheme.
