CBN, PenCom partner on 25 per cent pension funds for personal home investments

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Central Bank of Nigeria (CBN) and the National Pension Commission (PenCom) are working out modalities for workers under the contributory pensions’ scheme to access 25 per cent of their contributions for personal home investments.

Mrs. Ambah Hamda of City Bank yesterday broke the news in Abuja.

She said: “The 25 per cent of Retirement Savings Account (RSA) being made available to the holders as equity contribution for mortgages is a work in progress. The CBN and Bankers’ Committee will work with PenCom to make this a reality.

“Once it becomes a reality, an RSA holder will then be in a position to walk up to his pension fund administrator and ask to access 25 per cent saved up in his name and would like to borrow money to build a house.

“With such approval, you will then approach your banker. It would make the bank very willing because you will then be coming with a sizeable sum of money where you would also contribute to the project.”
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Mrs. Hamda said that the committee has also resolved that banks should support the pension industry to release up to 25 per cent of the N9 trillion Pensions’ Fund Assets (PSA) for the contributors of the fund to use as equity injection towards owing houses.

She went on: “Twenty-five per cent of N9 trillion is worth over N2 trillion and if this fund can be used to stimulate demand for mortgage loans in our economy. It was agreed that the Central Bank would talk to fellow regulators and also work with government of various states to make the while process of land transfer and titling a lot easier so that many more people across the nation can access mortgage financing, thereby stimulating demand in our economy.”

CBN Director, Corporate Communications, Mr. Isaac Okorafor, disclosed that when finalised, the 25 per cent pension contribution will form the contribution of workers to building their houses to which they can then obtain the remaining 75 per cent as loans from banks.

The Bankers’ Committee also announced that both the Creative Industry Initiative and Export Initiative have entered implementation stages and that operators in the sectors should begin to submit their proposals for funding to their various banks.

Mr. Patrick Akinruntan of FSDH Merchant Bank said the Creative Industry Fund was at the execution stage with all banks participating in the creative initiative.

He said: “Every person or business that is into any of the coverage areas is encouraged to put together their proposal, demonstrate the viability and approach their bank. The Central Bank will have a central collation point where all the requests that come through any bank are forwarded so that we have a way of knowing the impact we have made in creating employment and stimulating the economy.

“The same applies to the export support fund, be it in cashew nut, be it in sesame seeds and all the various rich exports that we are able to mobilise because of the impact for employment ability in the economy. There is learning for both customers and banks, but it is an area where we have absolute commitment.”

He noted that the interest rate for these initiatives is nine percent, including all charges.

Speaking on consumer financing, CBN’s Director of Banking Supervision, Mr. Ahmed Abdullahi, described consumer financing as an important asset class.

Abdullahi said: “Banks are looking for more innovative ways to create credit. At the moment, it is much structured around salaried staff but we need to look for ways of extending it to others, like using the collateral registry. Assets are more easily used as collaterals.

“The whole intention is to ultimately drive much more financing, which will have impact on other sectors of the economy along the value chain because the manufacturer is able to sell more products.”

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