Director-General, National Pension Commission, Mrs. Chinelo Anohu-Amazu
For
the first time under the Contributory Pension Scheme, workers in active
service will soon be allowed to withdraw 25 per cent of the balance in
their Retirement Savings Account as collateral for mortgage loan before
they reach retirement age.
This was contained in the draft
guidelines on withdrawals from the RSA, a copy, which was obtained by
our correspondent from the National Pension Commission on Friday.
The date for the commencement of such withdrawals by workers would soon be announced, it was learnt.
According
to the draft guidelines, such workers will, however, forfeit the lump
sum payment and shall only be entitled to a monthly pension payment when
they retire.
Section 3.5 of the draft guidelines
states that an eligible RSA holder shall be allowed to access a maximum
of 25 per cent of the RSA balance as equity contribution for a mortgage
loan.
Section 3.4 also states that a RSA
holder that has utilised a portion of the RSA balance as equity
contribution for residential mortgage may not be entitled to a lump sum
payment at retirement.
According to Section 89 (2) of the
Pension Reform Act 2014, a Pension Fund Administrator may, subject to
guidelines issued by PenCom, apply for a percentage of pension fund
assets in the RSA towards the payment of equity contribution for
residential mortgage by a holder of the RSA.
The guidelines also allow only contributors, who have a minimum of N6m in their RSA, to use part of it for a mortgage loan.
Specifically, Section 5.5 of the guidelines states that the mortgage loan shall be a minimum of N1.5m and a maximum of N50m.
Section 5.6 says that the mortgage loan
shall be for a minimum of five years and a maximum of 20 years; while
section 5.7 states that the interest rate on the mortgage loan shall be
at a fixed rate for the whole duration.
The guidelines also specify that the RSA
holder must be in active employment, either as a salaried employee or
self-employed person. It adds that the worker must have been
contributing consistently for a minimum of 10 years.
Part of the draft regulations indicates
that the money can only be used to purchase either a single-family home
or an apartment in a multi-unit building, which must be owner-occupied.
Section 5.3 states, “The property shall
have a comprehensive insurance policy in the name of the borrower to
cover the replacement or reinstatement cost of the property. The
insurance policy must note the RSA fund as one of the first loss payees,
to cover the equity contribution released by the PFA.”
PenCom also states, “The valuation of
the property to be purchased with the mortgage loan shall be carried out
by a licensed, independent valuer, who is a member in good standing
with the Nigerian Institution of Estate Surveyors and Valuers. He must
also have professional indemnity insurance with an insurance company
licensed and in good standing with the National Insurance Commission.”
According to the requirements, a Primary
Mortgage Bank or Deposit Money Bank licensed by the Central Bank of
Nigeria must grant mortgage loans to qualifying RSA holders as well as
provide the required documentation to the PFAs.
Culled from Punch
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