It has been the practice for workers after donkey years of active service, either in the Private or Public Sector, to retire and not have a plan for life after retirement, the least of which, ought to be a roof over their heads. This can be ascribed to poverty rates, low income, and harsh economic realities, amongst other notable factors. In September 2022, the National Pension Commission issued guidelines for workers to obtain a mortgage by accessing their retirement savings account (RSA). With this development, you can now utilize a percentage of your pension contributions to finance your home purchase/acquisition, thereby unlocking wealth in the Real Estate Sphere.


In order to understand and fully appreciate the concept of Leveraging your contributory pension for obtaining a mortgage, one has to have an insight into what the key phrases in this subject mean. Some notable words are:

Emoluments include basic salary, housing allowance, and transport allowance

Retirement Savings Account (RSA) means an account opened with a Pension Fund Administrator as specified in section II of this Act.

Pension Fund Administrator (PFA) means any corporate body licensed by the National Pension Commission as a pension fund administrator to manage and invest the pension funds in the employee’s Retirement Savings Account (RSA) and includes the Nigeria Social Insurance Trust Fund;

Micro Pension plan refers to an arrangement under the Contributory Pension Scheme (CPS) that allows the self-employed and persons working in organizations with less than (3) employees to make financial contributions towards the provision of pension at their retirement or incapacitation.

A mortgage Lender is a financial institution or mortgage bank that offers and underwrites home loans. They set the terms, interest rate, repayment schedule, and other key aspects of your mortgage.

Equity contribution is a monetary input required of a new asset owner, so he has a proportionate ownership interest in the asset with other owners.

Pension, in simple terms, is a fund from which payments are made to support a person’s retirement from work in the form of regular payments after an amount of money is accumulated during an employee’s service years. Pension benefits become effective for employees who have worked for the same employer for at least 10 years. It can, in simple parlance, be said to be,  a gratuity granted by the government as a reward or favor; a fixed sum paid regularly to a person under given conditions to such person following retirement from service or to surviving dependents.[i]

The Pension Reform Act 2014 defines pension fund as,

Pension fund means an investment fund within the pension scheme which is intended to accumulate during an individual working life from contributions and investment income, with the intention of providing income in retirement from the purchase of an annuity or in the form of a programmed withdrawal, with the possible option of an additional tax-free cash lump sum being paid to the individual.”

Mortgage was defined by the supreme court In ADETONO & ANOR. v. ZENITH INTL BANK PLC[ii] as

“…the creation of an interest in a property defeasible (i.e. annullable) upon performing the condition of paying a given sum of money with interest at a certain time. The legal consequences of the definition are that the owner of the mortgaged property becomes divested of the right to dispose of it until he has secured a release of the property from the mortgagee.”

Contributory pension[iii] is a scheme that is contributory (employer and employee), fully funded, privately managed, and third-party custody of the funds and assets. It is based on individual accounts (Retirement Savings Accounts). It ensures that everyone who has worked for the Public or Private Sector receives his or her retirement benefits as and when due. The Act establishes a minimum rate of contribution of 18 percent of the employee’s monthly emoluments, made up of at least 10 percent from the employer and 8 percent from the employee. Additionally, an employee has the option to increase their contribution by voluntarily making additional payments.

Co-joining the concepts into a single, straightforward concept entails using the money received after active duty to buy landed property, such as a house or a plot of land. Employees must monitor and guarantee quick monthly transfers of the pension contributions made by their employers if they want Retirement Savings holders to profit from investments made by PFAs, Section 85(1-2) Pension Reform Act.     

Section 89(2) Pension Reform Act allows Retirement Savings Account holders to use a portion of their RSA balance towards payment of equity for a residential mortgage. The approval followed in line with the provision of the Act, which provides for retirement savings account holders to use a portion of their RSA balance towards payment of equity for a residential mortgage.[iv]

Harnessing and leveraging on pension to obtain residential mortgage draws statutory backing from the guidelines with reliance on the Pension Reform Act and Constitution of the Federal Republic of Nigeria 1999 (as amended) that provides that

“Notwithstanding the provision of Sub-section (1) (c) of this Section, a Pension Fund Administrator may, subject to guidelines issued by the Commission, apply a percentage of the Pension assets in the Retirement Savings Account towards payment of equity contribution for payment of residential mortgage by a holder of Retirement Savings Account”[v]


“…the State shall direct its policy towards ensuring that suitable and adequate shelter are provided for all citizens in line with the fundamental objectives and directive principles of State Policy”[vi]

This provision portends accessibility to the funds by the holder, subject to the commission’s guidelines. The pension commission gave directives as to how to access these funds, harnessing the value of pensioners’ savings. Significant among the directives are:

  1. The applicant must be a Retirement Savings Account holder.
  2. That the applicant to the funds must be in active service of employment, either public or private.
  3. Employees that have less than three years to retire are not eligible to open an account.
  4. Application for equity contribution must be in person and not by proxy.
  5. Have an Offer Letter for the property duly signed by the property owner and verified by the mortgage lender.
  6. The RSA of the applicant shall have both employer and employee’s mandatory contributions for a cumulative minimum period of 60 months (five years).
  7. A contributor under the Micro Pension Plan (MPP) is also eligible, provided he/she has made contributions for at least 60 months (five years) prior to the date of his/her application, while RSA holders that have less than three years to retirement are not eligible.
  8. According to guidelines, married couples, who are RSA holders, are eligible to make a joint application, subject to individually satisfying the eligibility requirements.
  9. RSA holders, if registered before July 1, 2019, must have their records updated through the RSA data recapture exercise.


Research has shown that about 9.7 million Nigerians have a Retirement Savings Account as of June 2022.

It is trite to note that the maximum amount accessible at a go is 25 percent of the total mandatory retirement savings account balance as at the date of application of the funds, irrespective of the value of equity contribution required by the mortgage lender. Where 25 percent of a contributor’s RSA balance is not sufficient for payment as equity contribution, RSA holders may utilize the contingency portion of their voluntary contributions (if any). Also, Where the 25 percent the mortgage lender is asking for is equal to the 25 percent of your RSA, such an application remains eligible. But if what the mortgage lender is asking for is higher than what an applicant can access from his/her PFA, the applicant will have to look for the difference and pay and show evidence to your PFA. By implication, the difference in the amount needed to perfect the mortgage transaction must be handy, then the applicant can approach the commission with its offer letter for the property and the document as evidence that the difference in sum has been paid, and then the Pension Funds Administrator can hand over the balance to complete the 25 percent threshold.

It’s necessary to note that for the purpose of equity contribution for a residential mortgage, an RSA holder can only access his/her RSA once.

All of these processes should be carried along with the guidance of professionals, especially legal practitioners.

[i] Merriam-Webster Dictionary

[ii] (2011) LPELR-8237(SC)

[iii] Section 3 of the Pension Reforms Act.

[iv] Section 89 (2) of the Pension Reform Act 2014

[v] Section 11(1) of PRA 2014

[vi] section 16(2)(d) of the 1999 Constitution (as amended)

Written bOluwafemi Faniyi for The Trusted Advisors

Email us: [email protected]

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