Written by Sarah NEGEDU

PenCom drafts joint mortgage guidelines for couples

The National Pension Commission, PenCom, said it is mapping out new strategies that will allow married couples draw mortgages from their retirement savings under the Contributory Pension Scheme.

The new guideline, when fully implemented, will allow spouse who have Retirement Savings Accounts with Pension Fund Administrators, PFAs, use their savings to apply for joint mortgages to tackle their housing needs.

A report from the National Pension Commission titled ‘Accessing RSA via residential mortgage option’, stressed that interested spouses must meet laid down requirements.

The commission said it decided to allow couples come together to make joint applications, following fears expressed by many workers that they may not be able to meet the criteria in the mortgage guidelines to enable them to have access to their RSAs for mortgage loans.

It said spouses will start accessing the loans when the commission commences the implementation of the new guideline.

According to the report, “Spouses, who are RSA holders, shall be eligible to make a joint application subject to individually satisfying the eligibility requirements for accessing the residential mortgage.”

Part of the criteria for eligibility are that the RSA holder must be in active employment, either as a salaried employee or self-employed person, and shall make the application in person and not by proxy.

RSA holders must also have been contributing cumulatively for a minimum of 60 months (five years) prior to the application for mortgage guarantee.

It added that the RSA holder shall provide documentation required for securing the mortgage guarantee from the MGC and or other additional documentation as might be specified by the commission from time to time.

In a draft guideline on equity contribution for payment of residential mortgage by the commission, Section 3.4 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.

The draft guideline also allows only contributors that have a minimum of N6million in their RSA to use part of it for mortgage loan, because Section 5.5 of the guidelines states that the mortgage loan amount shall be a minimum of N1.5million and a maximum of N50million.

Section 89 (2) of the Pension Reform Act, 2014 provides that a PFA may, subject to guidelines issued by PenCom, apply a percentage of pension fund assets in the RSA towards payment of equity contribution for payment of residential mortgage by a holder of the RSA.

The main objective of the section is to facilitate access by the RSA holders to residential mortgages as well as stimulate the housing/mortgage finance sector.

The commission added that the proposed establishment of a mortgage guarantee company by the Federal Government through the Central Bank of Nigeria will enable an RSA holder to obtain a mortgage loan based on a mortgage guarantee issued by the MGC and secured by a portion of the worker’s RSA balance.


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