How Do You Borrow From Your Pension Fund(Trusted Methods In 2022)

How do you borrow from your pension fund?

In Nigeria, how do you borrow from your pension fund?

All Nigerian employees are now required by law to open a pension account. They contribute a small amount to the Retirement Savings Account (RSA) on a monthly basis through a Pension Fund Administrator (PFA).

One of the lesser-known advantages of owning an RSA is the ability to borrow from your pension funds in times of need. Are you curious as to how this can be accomplished? This article will show you how to borrow money from your Nigerian pension fund.


Having money in a pension account can come in handy in an emergency. Despite the disadvantages of borrowing this money, it is still a better option than taking out a loan from a bank.


What does borrowing from pension really mean?

In Nigeria, the terms for borrowing from your pension fund are as follows:

To borrow money from your pension fund before you retire, you must meet one of three requirements:

  1. You must have contributed to your RSA in a lump sum amount that is either additional or voluntary. You can take money out of that account before you retire.
  2. If you are under the age of 50, you can withdraw up to 25% of your retirement account fund. This applies if you lose your job and are unable to find another within four months. In addition, the amount is tax-free.
  3. You want to take out a home loan. RSA allows you to withdraw up to 25% of your retirement funds.


Apart from these conditions, the Pension Reform Act of 2014 makes it illegal to withdraw funds from your pension account.

How do you borrow from your pension fund in Nigeria?

This is determined by the administrator of your pension fund. For releasing funds to you, different pension fund administrations have different methods and requirements. However, you must present the following documents to your PFA as part of the process:

  1. A letter from your former employer terminating your employment or a letter of resignation.
  2. Payslip for the previous three months from PFA.
  3. A letter from you requesting a specific percentage of your RSA balance be deducted (25 percent maximum). This could also be a percentage of your lump-sum contribution that you made voluntarily.
  4. If applicable, proof of accrued pension rights (mostly for public sector workers).
  5. A letter of introduction or a bank statement from your bank.
  6. A birth certificate or a sworn declaration of age as proof of age
  7. A letter from your employer confirming that all contributions to your RSA have been received in full (for private-sector workers).
  8. If you work in the public sector, fill out the PenCom retiree indemnity form.
  9. A form from your PFA, as well as four passport photos.


If you want to get a mortgage loan, however, you must meet the following requirements:

  • You must be working, either as a salaried employee or as a self-employed individual.
  • You must have made consistent contributions to your RSA account for the previous ten years.
  • At the time of application, your debt-to-income ratio must not exceed 33.33 percent of your monthly income.
  • You must provide all documentation requested.


The following documents are required for a mortgage loan:

  1. A letter requesting access to your RSA account.
  2. A letter from a licensed Primary Mortgage Bank (PMB) or Deposit Money Bank offering a mortgage loan (DMB).
  3. Originals of documents pertaining to the property on which the mortgage loan was granted
  4. A letter of confirmation from the PMB or DMB to your PFA attesting to the mortgage transaction’s authenticity. They must have at least two bank directors sign this letter, as well as an official stamp or seal.



RSA allows you to borrow money under certain conditions, but with restrictions. You can borrow to buy a property asset or meet other needs if the conditions are right. Money saved in this way can be used to fund your retirement business or invest in something else.




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