This article is about how to borrow from your Pension fund in Nigeria currently in this year 2023. A pension account is currently a requirement for all employees in Nigeria. Employees contribute funds through a Pension Fund Administrator (PFA) to this account, which is known as the Retirement Savings Account (RSA). The ability for employees to borrow money from their pension funds whenever necessary is one benefit of having a Retirement Savings Account. You can draw from your pension fund in the event of unanticipated events and unforeseen circumstances and we will go over the processes with you as you read along.
GUIDE ON HOW TO BORROW FROM YOUR PENSION FUND IN NIGERIA 2022
If you want to borrow from your pension fund, you must follow the procedures established by your Pension Fund Administrator, as each administration has its own set of rules. The following documents are required prior to borrowing from your pension fund in Nigeria this 2023:
LETTER OF TERMINATION OF APPOINTMENT
Having a letter of termination from your prior employer is one of the requirements you must meet before asking your Pension Fund Administrator (PFA) to release your pension fund to you as a loan. If necessary, you may also submit a letter of resignation in place of this termination of appointment.
THREE MONTHS PAYSLIP
A three-month payslip from your pension fund administrator is another criteria you need before requesting to borrow from your pension fund. This payslip is a must before you may request a loan.
LETTER REQUESTING THE PAYMENT
Before contacting your Pension Fund Administrator for the loan, you should write a letter seeking a percentage of not more than 25% of payment from your Retirement Savings Account (RSA).
EVIDENCE OF ACCRUED PENSION RIGHTS
If necessary, one of the prerequisites for those who work in the public sector is proof of accrued pension rights. Simply make sure to have it readily available before speaking with your pension fund administrator.
LETTER OF INTRODUCTION FROM YOUR BANK
The next document required is a letter of introduction from your bank providing your bank statement after you must have prepared the other documents. You would obtain this letter directly from the commercial bank where you conduct business. All banking actions are detailed in the bank statement.
PROOF OF AGE
A birth certificate or sworn declaration of age that establishes your date of birth is another crucial document you should obtain before speaking with the Pension Fund Administrator. This is a crucial requirement.
LETTER FROM YOUR EMPLOYER
You also require a letter from your present employment confirming the full reimbursement of all contributions you made to your Retirement Savings Account if you want to borrow money from your pension fund. Note that only workers for private organizations require this letter from the employer.
PENCOM RETIREE INDEMNITY FORM
A PenCom retiree indemnity form is a crucial document you require if you work for the government and want to borrow money from your pension fund.
YOUR PENSION FUND ADMINISTRATOR’S FORM
A form provided by your pension fund administrator would also be required. You must submit this paperwork, which is a crucial requirement, before you can borrow money from your pension fund.
One of the most crucial conditions for borrowing from your pension fund is that you provide your most recent passport photographs. Endeavour to do so.
There are certain criteria you must meet if you want to borrow from your pension fund in Nigeria before retirement. They number around three. You can complete a minimum of one of them. One of the requirements for borrowing from your pension fund is that you have made a significant additional contribution to your Retirement Savings Account. Remember that you can only borrow from this additional contribution. Furthermore, if you are under the age of 50, you may borrow up to 25% of your retirement account fund.
This criterion applies if you lose your source of income and have not found another within four months. Finally, if you plan to get a mortgage, your Retirement Savings Account allows you to withdraw up to 25% of your pension account. Apart from the conditions outlined above for borrowing from your pension fund, the Pension Reform Act of 2014 prohibits withdrawals from your pension account.
People borrow from their pension fund for a variety of reasons. One of the reasons is when a person wishes to purchase a new home or even build one from the ground up. When this occurs, you may feel compelled to borrow from your pension fund. Another reason is when you see the need to grow your company. People tend to borrow from financial institutions or money-lending companies when this fund is not easily accessible.
They can even withdraw funds from their savings account. Borrowing from your pension savings account is preferable to borrowing from traditional financial institutions or even dipping into your savings. When people are faced with financial situations that are beyond their control, they have a strong tendency to borrow money. Just keep in mind that borrowing from your pension savings account is safer.