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The Federal Government has committed to reversing deductions from the Employees’ Compensation Scheme overseen by the Nigeria Social Insurance Trust Fund (NSITF) in order to alleviate tensions with the Nigeria Labour Congress (NLC), which has warned of a potential nationwide strike.
Recently, the NLC accused the government of misappropriating 40 percent of the NSITF contributions for its treasury, claiming it undermines workers’ social security and demanding an immediate refund along with the reconstitution of the National Pension Commission board.
They cautioned that failure to comply could lead to industrial action across the country.
The Employees’ Compensation Scheme is a social insurance initiative that offers financial assistance to employees who face work-related injuries, illnesses, disabilities, or fatalities.
This scheme is funded solely by employer contributions, generally about one percent of the monthly payroll, with no employee contributions necessary.
In a letter dated August 16, 2025, the NSITF Managing Director, Oluwaseun Faleye, acknowledged the occurrence of deductions from workers’ compensation contributions but claimed they weren't a misappropriation of funds. ]
This letter was also sent to the Ministers of Labour and Finance, the Director-General of the Budget Office, and the Accountant-General of the Federation.
Faleye explained that these deductions resulted from a federal policy implemented in December 2023, which mandated all government-owned enterprises to remit half of their internally generated revenue to the treasury.
This policy, instigated by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, was aimed at boosting government revenue and addressing a growing fiscal deficit, a strategic initiative strongly supported by President Bola Tinubu.
“Recall that the Federal Ministry of Finance circular (Ref: FMFCME/OTHERS/IGR/CFR/21/2021) dated December 28, 2023, introduced a policy of automatic deduction of 50 percent from the internally generated revenue of all Federal Government-owned enterprises,” Faleye elaborated in the letter.
The agency indicated that the contributions from employers, legally mandated, are no longer being deducted following a directive from the Accountant-General of the Federation issued in March 2024, and some of the deductions that had been made have already been reversed.
However, deductions from investment income generated from these contributions are still ongoing, and NSITF is working with authorities to address the issue. Officials from the Budget Office and the Ministry of Finance have assured that no additional debits would occur.
“We have received assurances that this issue will be resolved. Both the Minister of Finance and the Director-General of the Budget Office committed in meetings held in August 2025 that no further deductions would occur from either contributions or investment proceeds,” NSITF stated.
President Tinubu appointed Tanimu Yakubu as Director-General of the Budget Office in June 2024, following the end of Ben Akabueze’s term, and in March 2025, named Shamsedeen Ogunjimi as Accountant-General of the Federation to take over from the retired Oluwatoyin Madehin.
The labor union confirmed receipt of the NSITF’s letter but mentioned that its executive council would review the communication before making a decision regarding the possible strike, as stated by Assistant General Secretary Christopher Onyeka .
Onyeka characterized NSITF as a tripartite agency co-owned by workers, employers, and the government, arguing it should not be perceived as a revenue-generating entity.
“The contributions to NSITF are intended for compensating workers in the event of injury. They are not government revenue and should not be utilized for fiscal purposes,” he argued.
“Depleting these funds would hinder the agency’s capacity to support workers when necessary. It is inappropriate for the Ministry of Finance to categorize NSITF as a revenue-generating body.”
The union observed that the deductions commenced under the current administration and mentioned that letters had been sent to the Ministry of Finance and NSITF over a month ago, receiving a response on the following Saturday. “It’s our responsibility to protect these funds,” Onyeka added.
Additionally, in response to claims that NSITF was intending to amend the Employees’ Compensation Act in ways that could jeopardize workers' rights, Faleye stated that the agency’s proposals are aimed at enhancing enforcement, not diminishing protections.
“As an organization striving to improve its operational effectiveness, we have engaged with the National Assembly through our annual retreats, which include various tripartite stakeholders.
During these retreats, we offered suggestions and recommendations to National Assembly members that we believe will further enhance compliance with the Employees’ Compensation Scheme,” the agency communicated.
One of these recommendations is the necessity to grant NSITF greater authority to enforce compliance with the ECA against defaulting employers, which would improve and safeguard workers’ rights rather than undermine them.
The executive added that any further legislative actions are the purview of the National Assembly, stating, “As an organization, we don’t have the authority to legislate or hinder the amendment processes initiated by the National Assembly. That responsibility lies solely with the legislature. We have committed to participating in the process at the proper time during stakeholder engagement activities for such amendments and will encourage all participants to engage accordingly in order to create an inclusive law upon completion,” Faleye explained.
The NLC has also raised issues regarding the non-constitution of the PenCom board, labeling the situation as a severe legal violation that could compromise oversight of workers’ retirement funds.
In a statement released last week by its Central Working Committee, the NLC pointed out that the lack of a fully constituted board contravenes the PenCom Act and other relevant statutes.
The union cautioned that the existing vacuum allows the federal government to exert unilateral control over pension funds contributed by workers and employers, diluting statutory tripartite oversight and escalating the risk of mismanagement and political meddling.
“The NLC emphasizes its serious concern over the non-constitution of the Governing Board of PenCom, which violates the PenCom Act and further statutes. This unlawful vacuum enables the government to oversee pension funds contributed by workers and employers exclusively, eliminating statutory tripartite oversight and amplifying the danger of mismanagement and political interference,” the statement asserted.
The labor union insisted that pension funds signify deferred wages for employees, not government revenue, and called for swift actions to restore proper governance. “We demand the immediate formation of the PenCom Board in full compliance with the law,” added the NLC.
Section 19 of the Pension Reform Act 2014 stipulates a 16-member PenCom Governing Board. The President appoints the Chairman, Director General, and four full-time Commissioners, subject to Senate approval. The additional ten seats are reserved for representatives from crucial stakeholders, including the NLC, Trade Union Congress, Nigeria Union of Pensioners, and the Nigeria Employers’ Consultative Association.
The prior board was disbanded on June 16, 2023, along with other federal parastatal boards, under a directive from President Bola Tinubu. While several boards have since been reconstituted, the PenCom board remains incomplete.
Omolola Oloworaran was appointed as Director-General on July 13, 2024, and was confirmed by the Senate on November 21, 2024, yet the Chairman and four full-time Commissioners have yet to be designated. Once appointed, institutions including the Central Bank, Securities and Exchange Commission, and Federal Ministry of Finance will nominate their representatives.
Director of the Centre for Pension Rights Advocacy, Ivor Takor, expressed that the delay in forming the board is a legitimate concern.
“The NLC’s demand for the timely reconstitution of the board aligns with the Pension Reform Act 2014,” he stated.
Regarding the NLC’s request for pension fund account details, Takor clarified two types of funds: administrative funds supervised by PenCom and pension assets managed by Pension Fund Administrators (PFAs).
“PenCom administrative funds are reported to the Governing Board, and it is the obligation of board representatives to communicate this information to the NLC,” he noted. “In the absence of a full board, this process is hindered.”
Pension assets under PFAs are invested and reported to PenCom, which compiles and disseminates monthly, quarterly, and annual reports. Section 36(3) of the Act mandates that PenCom publish its annual report, including audited statements, in at least three national newspapers within six months following the financial year-end. These reports are accessible to the public, including the NLC.
Takor acknowledged the validity of the NLC’s concerns about the board delay, but asserted that its demand for direct access to pension fund reports lacks legal backing.
Consumer rights advocate Moses Igbrude urged for negotiation rather than strikes. “Not everything should revert to strikes; there are ways to resolve disputes. Both parties should convene, present issues, and reach a consensus before escalating tensions,” he commented.
The NLC has become increasingly assertive on various issues, from fuel subsidy removal to electricity tariff increases and minimum wage discussions. Including pension protection in their list of concerns could exacerbate an already strained relationship.
The Nigeria Employers’ Consultative Association, on its part, endorsed certain aspects of the NLC’s stance, particularly the demand for the federal government to establish a governing board for PenCom. NECA contended that not having a board compromises regulatory credibility and limits effective pension administration oversight.
“Failing to constitute the board is a breach of the Act. Given this government’s respect for due process and the rule of law, we expect this crucial step to be taken,” NECA Director-General, Adewale-Smatt Oyerinde, noted.
The agency stressed that despite any disruptions, workers’ funds are secure and safe, referring to the contributions as "ring-fenced assets" that cannot be diverted without a trace.
“Every contribution is documented. The integrity of the Employees’ Compensation Scheme remains intact. What has transpired is an unfortunate application of a general revenue policy that was not planned with our operations in consideration,” the agency asserted.
Earlier, PenCom confirmed that retirement savings accounts are safe, and there have been no diversions of pension assets under its management.
Head of Corporate Communications at PenCom, Ibrahim Buwal said that contributors receive monthly or quarterly statements of their Retirement Savings Accounts, asserting, “No one’s money is missing. I can confirm there are no pension funds under the CPS that are unaccounted for.”
