By Sola Alabadan
The pension operators in Nigeria are excited that the National Pension Commission (PenCom) has finally issued the guidelines that allow Retirement Savings Account (RSA) holders to use 25 percent of their RSA balance to pay for residential mortgage.
The pension operators under the aegis of Pension Fund Operators Association of Nigeria (PenOp) said they are primmed to partner with the PenCom, RSA holders and other stakeholders, to ensure that this guideline, in line with Section 89 (2) of the Pension Reform Act 2014, is implemented successfully. PenOp comprises all the Licensed Pension Fund Custodians, Pension Fund Administrators and Closed Pension Fund Administrators (PFCs, PFAs and CPFAs) operating in Nigeria.
While pointing out that the policy will help to improve the homeownership ratio and first-time home buyer statistics in Nigeria, the association added that the policy is very catalytic in nature and has the potential to spur growth in other sectors of the economy.
PenOp stated that “It should boost the mortgage finance and home loan sector, in addition to having a positive effect on the construction value chain and building materials sector.
“We believe it will create massive jobs for artisans and blue color workers involved in the construction value chain and also further open up wealth management and financial planning industry.
“RSA holders will now begin to plan towards a target RSA balance because they have a goal of owning a home.
We also believe that voluntary contributions will increase because people can use the contingent portion of their voluntary contributions as part of the equity contribution for residential mortgages. In addition, more companies will now take their contributions more seriously as will staffs of these companies.
PenOp urged those who do not have an RSA account to commence the process in conjunction with their employers, even as the operators encouraged workers in self-employment to take advantage of the Micro Pension Plan (MPP).
In view of the fact that the policy extends to self-employed individuals and those in the informal sector, the pension operators believe it would help to grow the Micro Pension business and ensure that millions of Nigerians in the informal sector have the opportunity to enjoy structured pensions when they retire and also benefit from the gains of the pension reform.
