How to borrow from your pension fund in Nigeria

In Nigeria, owning a pension account has become a statutory requirement for all employees. This account, known as the Retirement Savings Account (RSA), allows individuals to make monthly contributions through a Pension Fund Administrator (PFA). One of the lesser-known benefits of having an RSA is the ability to borrow from your pension funds in times of need. While this option has its drawbacks, it can be a more favorable alternative to obtaining a loan from a financial institution.

Conditions for Borrowing from Your Pension Fund

Before retirement, there are three key criteria you must meet to be eligible for a loan from your pension fund:

  1. Additional Contributions: You must have made additional or voluntary lump sum contributions to your RSA. This is the money from which you can make a withdrawal before retirement.
  2. Under 50 and Unemployed: If you’re under the age of 50 and find yourself unemployed without securing another job within 4 months, you can withdraw up to 25% of your retirement account fund. This withdrawal is also tax-free.
  3. Mortgage Loan: If you’re seeking a mortgage loan, you can withdraw up to 25% of your retirement funds.

Please note that apart from these conditions, the Pension Reform Act of 2014 strictly prohibits any other withdrawals from your pension account.

How to Borrow from Your Pension Fund in Nigeria

The process for borrowing from your pension fund depends on your Pension Fund Administrator. However, you will generally need the following documents:

  1. Letter of termination of appointment issued by your former employer or letter of resignation.
  2. PFA’s last three months’ payslips.
  3. A letter from you requesting a desired percentage of payment from your RSA balance (up to 25% maximum). This can also be a percentage of 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 confirming full remittance of all contributions to your RSA (for private sector workers).
  8. PenCom retiree indemnity form if you work in the public sector.
  9. A form provided by your PFA and four passport photographs.

For those seeking a mortgage loan, additional criteria apply:

  1. Active employment as a salary earner or self-employed.
  2. Consistent contributions to your RSA account for the last 10 years.
  3. Debt-to-income ratio not exceeding 33.33% of your monthly income at the time of application.
  4. Provide all requested documentation.

The documentation required for a Mortgage loan includes:

  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 for the property on which the mortgage loan was granted.
  4. A confirmation letter issued by the PMB or DMB to your PFA, affirming the authenticity of the mortgage transaction.


While subject to certain restrictions, having an RSA provides the option to borrow money under specific conditions. With the right circumstances, you can use these funds to acquire property or meet other financial needs. This money can even be employed to fund your business in retirement or invested in other ventures.

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