In order to enhance home ownership among millions of workers yearning to have roof over their heads before or after retirement, the National Pension Commission (PenCom) says it is working with the Nigeria Mortgage Refinance Company (NMRC) on implementation of a section of the Pension Reform Act (PRA).
According to the Head, Research & Strategy Management Department of PenCom, Dr. Umaru Farouk, implementation of this section of PRA will allow contributors use part of their pension savings to pay their personal equity towards having a primary home.
Farouk disclosed this during the webinar on “Housing Finance Ecosystem: Matching the Demand and Supply and the Intervention,” hosted by the Housing Development Advocacy Network (HDAN) in Abuja.
He said: “There is one important issue that we have been working with NMRC on. In terms of the implementation of the provisions of Section 89(2) of the PRA; that section provides that contributors could actually use part of their pension savings to pay their personal equity towards having a primary home.”
Presently, he said the section of the Act had not been implemented, adding that the commission was waiting for many things, including the mortgage guarantee by the Central Bank of Nigeria (CBN).
Farouk said the commission had not really gone so far in terms of implementing section 89 (2), but waiting for some feedback from NMRC to be able to review the regulation, make some additions in order to come up with a working framework.
“I believe we are working with the right agencies in this aspect,” he added.
PenCom is the agency responsible for managing pensions in Nigeria under the new pension law.
Nigeria has over 17 million housing deficit and would need to build one million homes annually for 20 years to meet the need.
Commenting, one of the affordable housing advocates, Dr Joshua Egbagbe, described the workings between PenCom and NMRC as a ‘possible game changer’ in enhancing offtakers affordability dynamics.
He advised that criteria for applying for the RSA should be flexible enough for low income workers, which in turn depends on the underwriting criteria of the mortgage institution influencing the mortgage and purchase of the homes being financed.
According to him, there was need to set up an inter-agency committee to look at such strategic criteria, while working with PenCom management within a short timeline and focussed Terms of Reference (TOR).
The inter-agency committee, he said should include NMRC, Federal Mortgage Bank of Nigeria (FMBN), Family Home Funds (FHF), mortgage bankers association, real estate developers association and labour leadership.
“Otherwise, if the criteria are too rigorous; access could be seriously hampered from the point of view of stringent “re-finance based home mortgage affordability criteria,” he said.
On how monies received by the commission are invested, Farouk explained that PenCom only grants funds when there are supporting instruments, either as a fund or a bond as contained in its existing regulations.
In terms of the existing regulation, he said the agency could actually invest 20 per cent in some situations, and in some cases could actually invest up to 24 per cent in infrastructural development, adding that this includes housing infrastructure, 15 per cent in infrastructure bonds and five per cent in infrastructure funds.
“In some situations, people go more than just 5 per cent in infrastructure funds or more than just 15 per cent in the infrastructure bonds,”he said.
On how the commission invest the monies, he said: “We don’t go directly cash. We don’t just give cash and say go and build a road or build some housing units. We don’t do that. How do I refund on a bond? You need to come with the supporting instruments either a fund or a bond then PFAs can buy into the bond or into the fund.”
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