BY BAMIDELE FAMOOFO
Pension Operators Association of Nigeria has projected that pension funds in Nigeria will hit the N14.8 trillion mark by the end of 2022. The industry recorded a total asset of N14.6 trillion as at September 30, 2022.
President, PenOp, Olumide Oyetan said at a media retreat for pension editors in Lagos that pension is a sensitive subject, hence the need for the right information to be made available to members of the public.
“Pension is a sensitive subject and providing the right information to the public is important. And we have a big responsibility to get it right. Our responsibility today is how to sustain the success recorded so far. Pension should be relevant to the lives of people.”
Oyetan, who is also the Managing Director/CEO of Stanbic IBTC Pension Managers, emphasized the need for stakeholders to work together to ensure successful implementation of the guidelines on using Retirement Savings Account to access their equity contributions for the acquisition of residential mortgages.
He said successful implementation of the initiative would improve people’s welfare and move the country forward.
Presenting the theme paper, Ibrahim Kangiwa, Head of Investment Department, National Pension Commission, said for contributors under the Contributory Pension Scheme to be eligible to use their RSA balance for acquisition of residential mortgages, they must have contributed for five years (60 months) cumulative of employer and employee’s mandatory contributions.
He said the same thing was applicable to the contributors under the Micro Pension, adding that married couples, who individually met the eligibility criteria, were also eligible.
On authorized limit for equity contribution that qualifies a contributor, Kangiwa put the maximum allowed at 25 percent of the RSA balance, noting that “where 25 percent of RSA balance is more than equity contribution, the RSA holder can only access the amount equivalent to equity contribution required.
“Where 25 percent is not sufficient for equity contribution, RSA holders may utilize Voluntary Contribution (VC) in line with the Voluntary Contribution guidelines. Where 25 per cent is not sufficient for equity contribution, Micro Pension (MP) contributors may utilise the contingency portion in line with MP guidelines. Where 25 per cent is insufficient as an equity contribution, RSA holders shall deposit the difference with the mortgage lender,” Kangiwa explained.
Those exempted from this initiative, according to Kangiwa, include RSA holders that have less than three years to retire; 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 that 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.
Kangiwa said the objective of the initiative was to provide housing for first time home-owners and improve the standard of living of RSA holders under the CPS by facilitating their ownership of residential homes during their working life.