The National Pension Commission (PENCOM) has been commended by the Pension Operators of Nigeria for the recent release of the guidelines that brings into effect the use of a portion of one’s retirement savings account (RSA) as equity contribution for obtaining residential mortgages.
PenOp in the thumb up said the provision for this had been part of the amendments that occurred when the Pension Reform Act was amended in 2014. “We are aware that the process of actualizing this portion of the act has gone through a number of iterations and stakeholder engagement and we are happy that it has finally been released. Whilst we realize that there might be some initial teething problems, we the pension operators are excited and are primmed to partner with the commission, RSA holders and other stakeholders to ensure that this policy actualizes the reason for why it was set up.”
Believing that the PenCom intervention would swell the number of home buyers PenOp said the homeownership ratio and first-time home buyer statistics in Nigeria is very low and we believe that this policy will help to improve this and also provide increased benefits to RSA holders in the immediate.
Looking at the chain effect, the statement focused on the ripple effect, reiterating that the policy is very catalytic in nature and has the potential to spur growth in other sectors of the economy. 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 collar 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,” it stated
PenOp said the 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.
Putting all in the loop the statement urged those who do not have an RSA account and are working in the formal sector, to commence the process in conjunction with their employers. For the in self-employment, we also encourage them to take advantage of the Micro Pension Plan (MPP). “Regarding the MPP, we are also happy that the policy extended to self-employed individuals and those in the informal sector. We believe this will help to grow the Micro Pension business and ensure that millions of Nigerians in the informal sector will have the opportunity to enjoy structured pensions when they retire and also benefit from the gains of the pension reform.”
PenOp cleared that the policy is net positive for the pension industry and the economy as a whole. “The effects are catalytic and will help to galvanize various sector of the economy. The pension industry over the years has played a significant role in the local debt and equity market, financing National and Sub National projects and debt programs and financed transformational companies and projects. The industry is primmed to do more and we believe that this new policy is another milestone in the positive effect of the pension industry on the economy and also another example of the collaborative nature of the pension regulator that leads to gains for the wider economy.”
