2 hours ago
3
LAGOS – For the average worker in Nigeria, whether in the public or private sector, owning a home is often seen as a pipe dream. This feeling can be ascribed to low income, non-availability of affordable homes or lack of access to flexible and cheap financing options.
But a major silver lining opened for Nigerian workers in September 2022 when the National Pension Commission issued guidelines for obtaining mortgage finance by workers through the utilization of a portion of the funds in their Retirement Savings Accounts (RSAs). This development made it possible for eligible RSA Holders to utilize a percentage of their total pension contributions to finance a home purchase/acquisition.
According to the Federal Mortgage Bank of Nigeria, the nation’s housing deficit was estimated at 28 million units as of January 2023, with an annual increase of 900,000 units which means that 28 million people or more are in dire need of a home.
Veritas Glanvills Pensions Limited (VG Pensions) has put in structures and resources to assist its clients in accessing residential mortgages through their pension contributions. The Company understands that owning a home is an essential part of financial security and retirement planning and has successfully assisted many of its clients in processing their residential mortgage. The Company remains committed to playing this crucial role in making the homeownership dream of its clients a reality.
VG Pensions is a licensed Pension Fund Administrator managing Retirement Savings Accounts (RSA) of individuals and pension assets of institutions in the public and private sectors of the country. For over 15 years, the Company has remained committed to providing exceptional client services, efficient benefits administration, easy access to pension savings for residential mortgage, and growth in the pension funds of its clients. Focus on safe investment activities and decent returns have enabled the PFA to achieve consistent growth in all assets under its management. This in turn has helped its clients who exit from active employment to retire into relative comfort.
What RSA Holders should know about the Pension Mortgage Scheme?
The Guidelines permit an eligible RSA holder to apply twenty-five percent (25%) of the total RSA balance as at the date of application, to fund equity contribution for residential mortgage.
An eligible RSA holder is an employee registered under the Contributory Pension Scheme (“CPS”) and whose RSA has received both the employer’s and employees’ mandatory contributions for a cumulative minimum period of 60 months (5 years). In addition to this, the RSA holder shall be in active employment (either as a salaried employee or as a self-employed person) and shall not have less than three (3) years to retirement, at the time of the application.
Existing retirees on the CPS and persons who are exempted under the Act are not eligible to apply under the Guidelines.
Married couples, who are both RSA holders, are eligible to make a joint application if they each meet the eligibility requirements.
The allowable limit shall remain 25% of RSA balance irrespective of the percentage of equity contribution required by the mortgage lender. Where the allowable 25% is higher than the value of the equity contribution required, the RSA holder shall nonetheless be able to access only an amount equivalent to the equity contribution. Also, where the allowable 25% is lower than the value of the equity contribution, the RSA holder shall be required to deposit the difference with the mortgage lender before an application under the Guideline can be approved.
Subject to the Guidelines, an eligible RSA holder who has made voluntary contribution (“VC”) as permissible by the Act, shall be allowed to utilize the contingent portion of the VC in meeting the required equity contribution. Similarly, NSITF and other Pre-Scheme Contributions of active RSA contributors, are allowed to form part of the RSA balance in determining the required 25percent equity contribution.
Utilization of the allowable 25percent by an eligible RSA holder for equity contribution for residential mortgage under the Guidelines, shall not render the RSA holder ineligible for payment of 25percent of the RSA balance for loss of job in line with the provisions of the Act, and verse versa.
Micro Pension Contributors (persons who are registered under the Micro Pension Plan) are also allowed to access their RSA balances for residential mortgage provided the applicant has made contributions for a minimum of 60 months prior to the time of application and may utilize the contingent portion of his/her contribution, in line with the Guidelines for Micro Pension Plan.
Documentation requirements include the following:
o Mortgage Offer Letter.
o Application for Mortgage Form (“application form”) signed by the RSA holder to the PFA.
o Property Offer Letter (obtained from the property owner/approved agent, showing value, type, and address of property).
o Loan Amount.
o Equity Contribution.
o Bank account details of the applicant with the Mortgage Lender.
o RSA Statement
o Indemnity by the Mortgage Lender to the PFA on the use of the equity contribution.
o Evidence of payment of difference, where 25percent of RSA available, cannot cover equity required by the Mortgage Lender.
