The Federal Government has pledged to reverse earlier deductions made from the Employees’ Compensation Scheme managed by the Nigeria Social Insurance Trust Fund (NSITF), a move aimed at calming tensions with the Nigeria Labour Congress (NLC) after the union threatened a nationwide strike.
Last week, the NLC accused the government of siphoning 40 percent of contributions meant for the scheme into the federal treasury. The union insisted the funds were meant exclusively to secure workers against workplace accidents and illnesses. It warned that failure to refund and address other pending issues—such as the non-constitution of the National Pension Commission (PenCom) board—would force it to embark on industrial action.
The Employees’ Compensation Scheme is a statutory social insurance fund created to support workers and their families in cases of injuries, disabilities, illnesses, or death arising from work. It is financed solely by employer contributions, without deductions from workers’ salaries.
In a letter dated August 16, 2025, NSITF Managing Director, Oluwaseun Faleye, admitted that deductions had taken place. However, he clarified that they were not illegal diversions but part of a December 2023 fiscal policy that required all government-owned enterprises to remit 50 percent of their internally generated revenue to the treasury.
“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 per cent from the internally generated revenue of all Federal Government-owned enterprises,” Faleye explained.
Faleye further disclosed that contributions from employers, considered statutory liabilities, had since been exempted from such deductions following a March 2024 directive by the Accountant-General of the Federation. He added that part of the previously deducted funds had already been returned.
“We have been assured that this matter will be addressed. Both the Minister of Finance and the Director-General of the Budget Office, in meetings held in August 2025, committed that no further deductions would be made from either contributions or investment proceeds,” Faleye confirmed.
okay.ng reports that the NLC acknowledged receipt of the NSITF’s correspondence but insisted its executive council would deliberate before making a final decision on the planned strike.
Assistant General Secretary of the union, Christopher Onyeka, stressed that the NSITF is a tripartite institution representing workers, employers, and government, and therefore cannot be treated as a revenue-generating agency.
“The contributions to NSITF are intended to compensate workers in the event of injury. They are not government revenue and should not be used for fiscal purposes,” Onyeka said.
On the issue of the long-overdue PenCom board, the NLC emphasized that its absence contravened the Pension Reform Act and weakened oversight on workers’ pension funds. “We demand the immediate constitution of the PenCom Board in full compliance with the law,” the union declared.
Experts, including pension rights advocate Ivor Takor and the Nigeria Employers’ Consultative Association (NECA), have also backed the NLC’s position, stressing that leaving PenCom without a governing board undermines transparency and accountability in pension administration.
Despite the tension, the NSITF assured that workers’ funds remain safe. “Every contribution is accounted for. The integrity of the Employees’ Compensation Scheme is intact. What has happened is an unfortunate application of a general revenue policy that was not designed with our operations in mind,” Faleye reiterated.
