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.

http://www.punchng.com/news/workers-to-access-25-pension-savings-for-mortgage-to-forfeit-lump-sum-payment-at-retirement/ lalasticlala

Wait....

This is laudable, but the forfeiture of the lump sum which is the only tangible savings civil servants fall back on after retirement needs to be reexamine.

I swear it a welcomed development

IamPatriotic:
This is laudable, but the forfeiture of the lump sum which is the only tangible savings civil servants fall back on after retirement needs to be reexamine.

Explain further!

Hmmmmv

Good one...

It's [size=20pt]LadyF[/size] again

Ok

.

Hoo ohh

[size=20pt]eziokwu!! [/size]

Very touching



https://www.youtube.com/watch?v=HcdIH0N0fXU

Nice development

K

Not nice...

It's the lump sum that most of the retirees depend on after service and it ain't making sense. That should depend on the age of the retirees.

If they are still younger, they should go along with not giving a lump sum but if they are older, they should just give dem their lump sum make dem chop dem money before dem die.

Yes, it is. Thanks for sharing and happy Sunday.

mouaue:

Very touching



https://www.youtube.com/watch?v=HcdIH0N0fXU

Seems like dis guideline was meant to serve the interest of some selected few.

Review the lump sum. What happens after paying back d mortgage

IamPatriotic:
This is laudable, but the forfeiture of the lump sum which is the only tangible savings civil servants fall back on after retirement needs to be reexamine.

Do you realise what you just said in the end meant- "they should look into the possibility of workers eating their cake, yet still having it"??

Laughable.

omenka:
Do you realise what you just said in the end meant- "they should look into the possibility of workers eating their cake, yet still having it"??

Only 25% will be used as equity contribution.
Another 25% can giving as lump sum after retirement .. then the rest can be paid to them monthly.. i dnt think its a case of eating ur cake and having it.. Happy Sunday.. Go to church

powerfulsettingz:
I swear it a welcomed development

Did you read the whole thing through? it's 25 percent. Not 50 percent or 75 percent. 25 percent. That is fraudulent to say the least. They are preying on the desperation of Nigerians and you all are applauding. Remember it's still the workers money.

mortgage? so government wanna decide what pensioners do with their money...rubbish

ITS A NICE DEVELOPMENT....leaving the money to be growing at there 3% per annum is non sense.......u can grow ur money in leap and bounds at 12% atleast when you have access to it.....Good news

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Adesiji77:

http://www.punchng.com/news/workers-to-access-25-pension-savings-for-mortgage-to-forfeit-lump-sum-payment-at-retirement/ lalasticlala

Although it looks laudable but there are so many loopholes that are sticking out that will eventually not make this money access able.
1. If I can only access in cases where im getting mortgage from FSA or deposit money banks why do I need to add the PFA to the first loss payee? The banks will insist they must be the first loss payee. And when I'm only taking my 10% contrubution from my pension why does the PFA need to be a first loss payee?
2. Why do they need another valuation done? The banks or whoever im collecting the lump sum from would have done 2 independent valuations already at my cost then I will do another one for the PFA because of 10% contribution? are you pple sure u r alright?
All these include the fact that I have lost the ability to get the lump sum again.....Abeg si eba puo...if they want to favour pple they shld do if not they shldnt bother

It is a welcome idea

Alhamdulillah this wicked pension

Bollinger:


Did you read the whole thing through? it's 25 percent. Not 50 percent or 75 percent. 25 percent. That is fraudulent to say the least. They are preying on the desperation of Nigerians and you all are applauding. Remember it's still the workers money.

you can imagine that its only for thise who hae min of 6m as balance. what happen to younger generation with less that want to stop the "menace" of rent by landlords even as early as 40yrs old?

I do not support the idea but like someone said if it is an older person who's close to retirement age then such person can take advantage of this not young and vibrant workers.

I still don't understand this pension scheme at all