Retirement Savings Account (RSA) holders can now use their savings as contribution for residential mortgages, the National Pension Commission (PenCom) has said.
The commission said the approval is in line with Section 89 (2) of the Pension Reform Act 2014 (PRA 2014), which allows RSA holders to use a portion of their RSA balance towards payment of equity for residential mortgages.
In a statement on Friday, PenCom urged interested RSA holders to contact their Pension Fund Administrators for more information and guidance.
The guidelines cover pension contributors in active employment, either as a salaried employee or as a self-employed person.
According to the commission, interested RSA holders (applicants) must have an offer Letter for the property duly signed by the property owner and verified by the mortgage lender.
The RSA of the applicant will have both employer and employee’s mandatory contributions for a cumulative minimum period of 60 months (five years).
The guidelines further stipulated that a contributor under the Micro Pension Plan is also eligible, provided he/she has made contributions for at least 60 months (five years) prior to the date of his/her application.
RSA holders who have less than three years to retirement are not eligible, according to the guidelines.
Also, married couples, who are RSA holders, are eligible to make a joint application, subject to individually satisfying the eligibility requirements.
In addition, RSA holders, if registered before 1st July 2019, must have their records updated through the RSA data recapture exercise while application for equity contribution for residential mortgage shall be in person and not by proxy.
According to the PenCom guidelines, the maximum amount to be withdrawn must be 25 percent of the total mandatory RSA balance as at the date of application, irrespective of the value of equity contribution required by the mortgage lender.
It said that, where 25 percent of a contributor’s RSA balance is not sufficient for payment as equity contribution, RSA holders may utilise the contingency portion of their voluntary contributions (if any).
PenCom further clarified that to qualify as a Mortgage Lender for this purpose, the company must be licensed by the Central Bank, comply with the Contributory Pension Scheme and have a valid Pension Clearance Certificate.
