Fortune seems to be smiling on pension contributors under the Contributory Pension Scheme(CPS) as they can now own their dream homes through 25 per cent equity contribution from their Retirement Savings Accounts(RSAs), ZAKA KHALIQ writes.

All living creatures have where they call their house; that is, where they rest after their daily activities of fending for themselves and their families. The house protect them against the nuances of the night.

From termites, to bees, crabs, birds, lion and so on, they have an abode that house, not only them, but their children whom they look up to, to become like them in future.

In human kingdom, this is equally the same. Having a roof over your head is a great achievement, especially, in Africa and particularly, Nigeria, where only few people have the luxury of building their own house from personal savings.

If you are unlucky, as a tenant, to have a lousy and nosy landlord, who will always threaten to throw you and your family out of his house at the slightest provocation, it is then you will realise the need to build your own house. Aside the astronomical increase in rent in major urban centres, such as Lagos, Port Harcourt and Abuja, which most tenants struggle to cope with because of low disposable income, the hostility of most landlords is a major problem.

Against these premises, it is ideal to aspire to own a house, so that, at retirement, when money is not coming as it used to, such person would not be borrowing to pay rent.

To this end, the National Pension Commission(PenCom) recently came up with the implementation of residential mortgage initiative which was already in the Pension Reforms Act(PRA) 2014, a development most pension contributors and critical stakeholders have applauded.

The mortgage Plan allows pension contributors to access their retirement savings for equity contributions for the acquisition of residential mortgage.

This was the talking point at the 2022 Pension Fund Operators Association of Nigeria(PenOp) Annual Media parley held in Lekki, Lagos last week.

Requirements To Access Scheme

Speaking on this development, the head of Investment Department, National Pension Commission(PenCom), Ibrahim Kangiwa, said the initiative was to provide housing for first time home owners and improve the standard of living of Retirement Savings Account (RSA) holders under the Contributory Pension Scheme(CPS) by facilitating their ownership of residential homes during working life.

According to him, contributors under the Contributory Pension Scheme (CPS) to be eligible to use their RSA balance for acquisition of residential mortgages, must have contributed for five years (60 months) cumulative of employer and employee’s mandatory contributions.

He noted that the same thing was applicable to the contributors under the Micro Pension Plan (MPP), adding that, married couples, who individually met the eligibility criteria, were also eligible.

On authorised limit for equity contribution that qualifies a contributor, Kangiwa put the maximum allowed at 25 per cent of the RSA balance, noting that, “where 25 per cent of RSA balance is more than equity contribution, the RSA holder can only access the amount equivalent to equity contribution required. Where 25 per cent is not sufficient for equity contribution, RSA holder may utilise Voluntary Contribution (VC) in line with the Voluntary Contribution guidelines.

“Where 25 per cent is not sufficient for equity contribution, Micro Pension (MP) contributor may utilise contingency portion in line with MP guidelines.

“Where 25 per cent is insufficient as equity contribution, RSA holder shall deposit the difference with the mortgage lender.”

Those exempted from this initiative, according to Kangiwa, include: RSA holders that have less t=han three years to retirement; existing retirees on CPS; exempted persons under the PRA 2014 and RSA holders who do not have both employer and employee’s mandatory contributions for a cumulative minimum period of 60 months.

He said, equity contribution was not for refinancing existing mortgage, outright purchase of property and purchase of land, noting that, the property shall be for residential purpose only.

Pension Fund Operators’ Reactions

Similarly, the chief executive officer(CEO) of PenOp, Oguche Agudah, while presenting a paper with the theme: ‘Pension: An Opportunity to Own Your Own Home, An X-Ray of the New RSA Plan On Home Ownership,’ assured that the policy, which has come to stay, will continue to be improved upon and revised as the regulator, the National Pension Commission (PenCom) has promised.

He regretted that many Nigerians do not have a home, adding that, Nigeria is the lowest in the world when it comes to access to house.

He added that, what the pension regulator, PenCom, did was hopefully to ensure that people own their houses through RSA, while calling on media to educate the public on the policy, adding that, the industry wanted many people to know about the policy.

Aguda noted that, the mortgage scheme is still at its infancy and though, may have few teething challenges, but would be perfected as time goes on, promising that, toperators and the regulator will continue to tweak with the plan to ensure pension contributors get value for their contributions.

Meanwhile, the president, PenOp, Olumide Oyetan, has assured that a successful implementation of residential mortgage initiative would improve people’s welfare and move the country forward.

Oyetan, who is also the managing director/CEO, Stanbic IBTC Pension, called on relevant stakeholders to work together to ensure the successful implementation the guidelines.

Moreover, in his welcome speech, the head of Media Branding and Communication, PenOp, Mr Lanre Idris, said the annual media parley was another opportunity for the industry to engage the media, to provide an opportunity for operators, regulators and the media to engage and ensure creation of a growing community of champions for the pension industry reforms and the work that is going on within the industry.

Idris, who is also the managing director/CEO, Leadway Pensure Limited said: “this event provides another opportunity for us to commend you all for the work that you have done and to ask you to do even more in the coming years.”

While calling for constant education of the general public by media, he added that, “we need to do more to protect the gains of the scheme from personal and narrow interests and we need to do more to ensure that the benefit of the pension reform positively affects every home in Nigeria. At this juncture, I would like to reiterate that you the media, are a very critical stakeholder in achieving these goals for the industry.”

At the event, the managing director/CEO, Premium Pension Limited (PPL), Mr. Umar Sand Mairami, noted that, the Pension Fund Administrators(PFAs) are partnering some mortgage banks to ensure that contributors benefit from this scheme.

Stating that only 25 per cent of the RSA balance is allowed to be used as equity for the residential mortgage, he noted that, the partnership with mortgage firms will ensure that RSA holders get better rates for this housing scheme.

He expected that, with time, mortgage bankers will compete for better rate, which will lower the rates to be paid on this facility, in the long run.

Meanwhile, the National Pension Commission (PenCom) has approved 34 mortgage banks for full implementation of acquisition of residential mortgages by RSA holders.

Of the 34 banks, 18 are from Lagos, 8 from Abuja and the remaining 8 are from other states of the federation.

The mortgage lenders from Lagos are: Abbey Mortgage Bank Plc; Brent Mortgage Bank Ltd; AG Mortgage Bank Plc; Centagr Savings & Loans; City Code Savings & Loans; First Trust Mortgage Bank; Global Trust Mortgage; Haggai Mortgage; Homes-Base Mortgage; Imperial Homes; Jubilee-Life Mortgage Bank; Lagos Building & Investment; Prudential Mortgage Bank and Refuge Homes Savings & Loans.

Remaining ones from Lagos include: Resort Savings & Loans; Safetrust Mortgage Bank; STB Building Society; Union Homes and Mayfresh Mortgage Bank.

Those from Abuja are: Aso Savings & Loans; FHA Homes Ltd; First Generation Homes; Infinity Trust Mortgage Bank; MDSL Mortgage Bank LTD; Nigeria Police Mortgage Bank and Platinum Mortgage Bank

The remaining eight from other states are: Akwa Savings & Loans Ltd and Mutual Alliance both from Akwa Ibom; Coop Savings & Loans from Oyo State; Delta Trust Mortgage Bank; Gateway Mortgage Bank, Ogun State; Jigawa Savings & Loans, Jigawa state; Kebbi Stare Homes, Kebbi State and Living trust formally Omoluabi, Osun state.

Nigeria being one of the countries with the highest housing deficit, a scheme such as this could begin to rewrite history, especially, taking into consideration that about 10 million workers now have their respective RSAs that will be instrumental to accessing equity contribution for the residential mortgage finance.

For any pension contributor, he or she needs at least N8million in his or her Retirement Savings Account (RSA) to apply for residential mortgage finance through his contributions, investigation has revealed.

This amount would allow the use of 25 per cent of it, amounting to a minimum of N2million to build your dream house.

While those whose employers were consistent in pension contributions and have good salary package, have every reason to rejoice, the same cannot be said of employees whose employers failed to contribute regularly to their RSAs and or have poor salary package.