PENCOM ANNOUNCES RSA HOLDERS CAN PURCHASE HOMES USING 25% OF THEIR PENSION
The management of the National Pension Commission (PenCom) has announced a significant development for Retirement Savings Accounts (RSA) holders in Nigeria, granting them the opportunity to use 25 percent of their pension funds to purchase their own homes. This positive change comes as a result of the new mortgage policy introduced by PenCom. The housing deficit in Nigeria has been a pressing concern, with reports indicating an increase from seven million in 1991 to a staggering 28 million in 2023. This has led to the proliferation of overcrowded and outdated housing structures.
During a recent workshop held in Lagos, PenCom shed light on the evolution of the Personal Retirement Account (PRA), revealing that it was amended back in 2014 to enable contributors to access a quarter of their RSA balance for mortgage down payments. The workshop also highlighted Nigeria's remarkably low home ownership rate, estimated at a mere 9 percent of the population, placing the country at a stark contrast with nations like Singapore and the USA, which boast established national home ownership models.
PenCom underscored its commitment to enhancing retirement experiences for pensioners by expanding its scope to include housing mortgages. The Director General of PenCom, Aisha Dahir-Umar, emphasized that retirement should be viewed as the beginning of a new chapter filled with countless opportunities rather than the end of the road. In this pursuit, an initiative has been launched to foster a more conducive environment for pensioners.
Recognizing the profound housing challenges facing Nigeria, the Director General called for increased efforts from the Federal Government to introduce affordable housing programs that can facilitate broader home ownership. She pinpointed issues such as high down payments, price fluctuations, exorbitant interest rates, and corruption as key factors contributing to the country's significant housing shortfall.
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To facilitate this transformative policy, PenCom has granted approval to 34 primary mortgage banks through which RSA holders can access residential mortgages. The approved banks are spread across various regions, with a majority located in Lagos and Abuja. These banks include well-known names such as Abbey Mortgage Bank PLC, AG Mortgage Bank PLC, and Aso Savings and Loans PLC.
PenCom also clarified the eligibility criteria for individuals seeking to avail of this opportunity. Anyone with an RSA or Micro Pension Plan (MPP) can apply, provided they are actively employed or self-employed. However, for contributors who joined before July 1, 2019, the data recapture program must be completed to update their records.
In terms of the mortgage application process, PenCom outlined the steps involved. Applicants must first confirm their eligibility through their Pension Fund Administrator (PFA), obtain a letter from the property developer, and then approach the bank. Once the application is approved by the bank, it will be forwarded to the PFA for finalization. This significant policy change promises to address the housing gap and empower more Nigerians to achieve the dream of homeownership.