The National Pension Commission PenCom recently released guidelines on accessing Retirement Savings Account RSA balance for the payment of Equity for Residential Mortgage
This is in line with the provisions of the Pension Reform Act (PRA 2014)
Amongst the objectives of the guidelines is the establishment of documentation standards and implementation modalities for Pension Operators to process requests from RSA holders
According to the guidelines, the Maximum amount to be applied as Equity contribution for Residential Mortgage is 25% of the total RSA balance as at the date of application irrespective of the percentage of Equity contribution required by the Mortgage lender.
In a situation where the value of 25% of RSA balance is more than the required equity contribution, the guidelines state that the RSA holder can only access an amount equivalent to the Equity contribution required by the Mortgage Lender
And in a situation where the value of 25% of the RSA is lower than the Equity contribution required by the Mortgage Lender, the RSA is expected to deposit the difference with the Mortgage Lender before 25% of his or her RSA balance could be applied as Equity contribution.
Also of note is the fact that the RSA holder can only access his or her RSA once.
Here are some of the Eligibility
1. The RSA holder shall have an offer letter for the property duly signed by the property owner and verified by the Mortgage Lender
2. The RSA of the applicant shall have both employer and employee’s mandatory contributions for a cumulative minimum period of 60 months prior to the application for the RSA holder to access his or her RSA balance for the purpose of Equity contribution for residential mortgage
3. The applicant may utilise the contigent portion of his or her voluntary contribution for Equity contribution
4. RSA holders that have less than 3years to retirement shall not be eligible to use a portion of their RSA balance
Approval of Equity Contribution
The approval process is expected to be done within five working days. In a situation where the Applicant did not meet up with the requirements and the request is declined by the Commission, the Pension Fund Administrator PFA would then inform the Applicant within one working day stating the reasons for the decline.
Writing by Folasade Orimolade, editing by Daniel Adejo