How to borrow from your pension fund in Nigeria

So you want to know how to borrow from your pension fund in Nigeria? Good for you! This is a financial move that can help you in a lot of ways. However, there are certain things you need to know before you take this step.

In this post, we’ll explain what pension funds are in Nigeria, how borrowing from them works, and the process you need to follow in order to get your loan. We’ll also answer some of the most commonly asked questions about pension fund borrowing.

By the end of this article, you’ll have all the information you need to make an informed decision about whether or not borrowing from your pension fund is right for you.

What Is a Pension Fund?

A pension fund is a savings account that is set up by an employer for the exclusive use of its employees. The funds in the account are used to provide retirement benefits to the employees.

In Nigeria, you can borrow from your pension fund to finance a wide range of activities, including starting a business, buying a car, building or buying a home, and paying for your child’s education.


How Does Pension Fund Borrowing Work in Nigeria?

So, you want to borrow from your pension fund in Nigeria. That’s great! Pension fund borrowing is a great way to access the money you’ve saved for retirement. A perfect guide for your understanding of how it works is stated below:

Your employer will contribute a fixed percentage of your monthly salary into a pension fund. You can borrow a fixed percentage of this fund, depending on your needs.

The interest rate for pension fund borrowing is usually lower than other forms of borrowing, such as credit cards or personal loans. You can repay the loan over a period of up to 10 years, with monthly payments.

If you’re interested in borrowing from your pension fund, talk to your employer or pension administrator for more information.

Who Is Eligible to Borrow From Their Pension Fund in Nigeria?

  • You are eligible to borrow from your pension fund in Nigeria if:
  • You are a member of a pension scheme and have reached the age of retirement
  • Your age range must be between 55 and 70
  • You have retired from active service
  • You are incapacitated and unable to work

How Much Can Be Borrowed From a Pension Fund in Nigeria?

You can borrow a maximum of 50% of the total value of your pension fund, which is subject to a minimum loan amount of ₦200,000 and a maximum loan amount of ₦50,000,000.


However, the Central Bank of Nigeria (CBN) may approve a higher loan amount if it is deemed necessary.

In addition, the interest rate on a pension loan is usually 2% above the benchmark lending rate, which is currently 18%.

Are There Any Risks Associated With Borrowing From Your Pension Fund in Nigeria?

So, you’ve decided to borrow from your pension fund. That’s a big decision, and you’re definitely not alone! Many Nigerians have turned to their pension funds in order to get access to quick cash.

But before you take out that loan, it’s important to understand the risks associated with borrowing from your pension fund. You should take note of the points below:

  • You may be charged interest rates that are higher than those offered by traditional lenders.
  • You may be required to repay the loan within a short time frame, which could put a lot of pressure on your finances.
  • If you’re unable to repay the loan, you could lose your entire pension savings.

It’s important to weigh up all the risks before making a decision and to speak with an expert if you’re not sure what’s right for you.



You can borrow from your pension fund in Nigeria if you are a member of the Nigerian Contributory Pension Scheme. To do so, you will need to submit a written application to your pension fund administrator, as well as provide proof of financial need. Once approved, you will be able to withdraw up to 50% of your total pension benefits, though you will be required to repay the loan within 5 years. We hope you have now received the information needed on how to borrow from your pension fund in Nigeria.

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