Workers Flock to Pension Mortgage Scheme Amidst Housing Deficit

The Contributory Pension Scheme (CPS) has witnessed a significant surge in workers accessing their retirement savings for mortgage loans, amidst Nigeria’s huge housing deficit and the National Housing Fund’s (NHF) failure to

Within the first year of the pension mortgage scheme’s implementation, the number of workers using part of their retirement savings to invest in personal homes rose by 1,271% in just nine months. This development is attributed to the huge housing deficit estimated at 28 million housing units, valued at N21 trillion as of December 2023.

PenCom’s Guidelines

The pension mortgage scheme, introduced in 2022 by the National Pension Commission (PenCom), allows RSA holders to access their retirement savings for equity contribution towards acquiring residential mortgages. Eligible contributors must have contributed for five years (60 months) and meet specific criteria.

Industry Experts’ Insights

Experts attribute the surge in pension mortgage scheme participation to the NHF’s inefficiencies. President of the Nigeria Labour Congress, Joe Ajaero, criticized the NHF’s cumbersome loan process and lack of communication with contributors. Director, of the Centre for Pension Rights Advocacy, Ivor Takor, noted that less than 40% of NHF contributors have successfully obtained loans.

PenCom’s Mortgage Scheme Eligibility Criteria

To be eligible, contributors must:

• Have contributed for five years (60 months)
• Be in active employment or self-employed
• Meet specific criteria
• Married couples can individually access the scheme
• Maximum access is 25% of RSA balance

Exemptions

Those exempted from the scheme include:

• RSA holders with less than three years to retirement
• Existing retirees on CPS
• Exempted persons under the PRA 2014
• RSA holders without both employer and employee’s mandatory contributions for 60 months

Industry Stakeholders’ Reactions

Former President, of the Pension Fund Operators Association of Nigeria, Olumide Oyetan, praised the scheme’s potential to enhance contributors’ benefits and positively impact the economy. Head of the Investment Department, PenCom, Ibrahim Kangiwa, emphasized the initiative’s objective to provide housing for first-time homeowners and improve RSA holders’ standard of living.

Data Analysis

Data from PenCom shows:

• Q2’23: 90 RSA holders accessed N986.9 million
• Q3’23: 656 RSA holders accessed N7.9 billion (628.9% increase)
• Q4’23: 991 RSA holders accessed N9.6 billion (51.1% increase)
• Q1’24: 1,234 RSA holders accessed N10.5 billion (24.5% increase)

The upward trend is expected to persist, with experts predicting the pension mortgage scheme will soon outperform the NHF.