How to borrow from your pension fund in Nigeria

Sep 4th, 2020

Opening a pension account is now a statutory requirement for all Nigerian employees. Every month, they make a token contribution to the Retirement Savings Account (RSA) through a Pension Fund Administrator (PFA). 

One unsung benefit of owning an RSA is that you can borrow from your pension funds when in need. Wondering how that can be done? This article would serve as a guide on how to borrow from your pension fund in Nigeria.

Owning a pension account with funds can be a source of help during emergencies. Although there are cons in borrowing this fund, it remains a better option than obtaining a loan from financial institutions.

Conditions for borrowing from your pension fund in Nigeria

To borrow from your pension fund before retirement, you must satisfy one of the three criteria:

  1. You must have made additional or voluntary lump sum contributions into your RSA. It is from that money that you can withdraw before retirement.
  2. They also allow you to withdraw up to 25% of your retirement account fund if under the age of 50. This holds on to the event of losing your job and you cannot secure another within 4 months. The sum is also tax-free.
  3. You intend to get a mortgage loan. RSA allows withdrawal of up to 25% of retirement funds.

Please note that asides these conditions, the Pension Reform Act of 2014 strictly prohibits withdrawal from your pension account.

How to borrow from your pension fund in Nigeria

This depends on your Pension Fund Administrator. Different pension fund administrations have different methods and requirements for releasing funds to you. However, the process requires that you approach your PFA with the following documents:

  1. Letter of termination of appointment issued by your former employer or letter of resignation.
  2. PFA last three months’ payslip.
  3. A letter from you requesting a desired percentage of payment from your RSA balance (25% maximum). This could also be a percentage from your voluntary lump sum contribution.
  4. Evidence of accrued pension rights if applicable (mostly for public sector workers).
  5. Letter of introduction from your bank or bank statement.
  6. Proof of age through a birth certificate or sworn declaration of age
  7. Letter from your employer which confirms full remittance of all contributions made to your RSA (for private sector workers).
  8. PenCom retiree indemnity form if you work in the public sector.
  9. A form your PFA would give, and four passport photographs.

However, if you intend to obtain a mortgage loan, then you must satisfy the following criteria:

  • You must be in active employment either as a salary earner or self-employed.
  • You must have been contributing consistently to your RSA account for the last 10 years.
  • Your debt to income ratio shall not be more than 33.33% of your monthly income at the time of application.
  • You must provide all the requested documentation.

The documentation required for a Mortgage loan are:

  1. Application letter to access your RSA account
  2. A mortgage loan offer letter issued by a licensed Primary Mortgage Bank (PMB) or Deposit Money Bank (DMB).
  3. Valid copies of documents to property on which mortgage loan was granted
  4. A letter of confirmation issued by the PMB or DMB to your PFA to attest to the authenticity of the mortgage transaction. They must sign this letter by at least two directors of the bank, along with an official stamp or seal.



Although with restrictions, RSA allows you to borrow money under certain conditions. Under the right conditions, you can borrow to obtain a property asset or meet other needs. Such money can even be used to fund your business on retirement or invested in something else.

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