Workers participating in the Contributory Pension Scheme (CPS) are increasingly using their pension accounts to secure mortgage loans, preparing for homeownership by retirement. This shift is attributed to Nigeria’s significant housing deficit and the ongoing failure of the National Housing Fund (NHF) to address it effectively.
PENSION MORTGAGE SCHEME SEES EXPONENTIAL GROWTH
Findings from Financial Vanguard reveal a dramatic 1,271 percent increase in the number of workers utilizing their retirement savings for home investment within the first year of the pension mortgage scheme’s implementation. Launched last year, the scheme is based on the 2022 National Pension Commission (PenCom) Guidelines, which allow Retirement Savings Account (RSA) holders to use their balances for residential mortgage equity contributions.
SCHEME TARGETS HOUSING DEFICIT
The pension mortgage scheme aims to tackle Nigeria’s national housing deficit, estimated at 28 million units with a market value of N21 trillion as of December 2023. According to PenCom data, Pension Funds Administrators (PFAs) have disbursed N28.9 billion to 2,971 RSA holders for mortgage equity contributions between the second quarter of 2023 (Q2’23) and the first quarter of 2024 (Q1’24).
STEADY RISE IN MORTGAGE ACCESS
The data indicates a steady increase in the number of RSA holders accessing their pension savings for residential mortgages, starting with 90 holders in Q2’23, who withdrew N986.9 million.