The Federal Government has pledged to reverse deductions from the Employees’ Compensation Scheme managed by the Nigeria Social Insurance Trust Fund, to ease tensions with the Nigeria Labour Congress, following the threat of a nationwide strike by the union.
Last week, the NLC accused the Federal Government of diverting 40 per cent of NSITF contributions to the government’s treasury. The NLC said the move undermined workers’ social protection and demanded both an immediate refund and the full reconstitution of the National Pension Commission board. It warned that non-compliance could trigger industrial action nationwide.
The Employees’ Compensation Scheme is a social insurance programme providing financial support to employees who suffer work-related injuries, illnesses, disabilities, or death. The scheme is funded entirely by employer contributions, typically around one per cent of monthly payroll, with no contributions required from employees.
In a letter to the NLC dated August 16, 2025, NSITF Managing Director Oluwaseun Faleye confirmed that deductions from workers’ compensation contributions had occurred but said they were not a diversion of funds. The letter, seen by The PUNCH, 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 said the deductions followed a federal policy introduced in December 2023 requiring all government-owned enterprises to remit half of their internally generated revenue to the treasury. The policy, issued by the Minister of Finance and Coordinating Minister of the Economy Wale Edun, was designed to boost government revenue and narrow a widening fiscal deficit, reflecting a fiscal strategy strongly championed 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 per cent from the internally generated revenue of all Federal Government-owned enterprises,” Faleye detailed in the letter.
The agency said employers’ contributions, which are statutory liabilities and not government revenue, are no longer being deducted following a March 2024 directive from the Accountant-General of the Federation, and some of the previously deducted funds have already been reversed.
He said deductions on investment income generated from these contributions continue, and NSITF is actively engaging authorities to resolve the matter. Officials from the Budget Office and the Ministry of Finance have pledged that no further debits will be made.
“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,” the NSITF assured.
Tinubu appointed Tanimu Yakubu as Director-General of the Budget Office in June 2024, following the expiry of Ben Akabueze’s tenure, and in March 2025, named Shamsedeen Ogunjimi Accountant-General of the Federation to succeed the retired Oluwatoyin Madehin.
NLC’s reaction
The labour union acknowledged receipt of NSITF’s letter but said its executive council will review the correspondence before deciding on the proposed strike, Assistant General Secretary Christopher Onyeka told The PUNCH.
Onyeka described NSITF as a tripartite agency jointly owned by workers, employers, and the government and argued that it should not be treated as a revenue-generating body.
“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,” he said.
“Depleting these funds would compromise the agency’s ability to support workers when required. It is anomalous for the Ministry of Finance to classify NSITF as a revenue-generating entity.”
The union noted that the deductions began under the current administration and said letters were sent to the Ministry of Finance and NSITF over a month ago. The union received a response on Saturday. “Protecting these funds is our responsibility,” Onyeka added.
Meanwhile, reacting to allegations that NSITF was seeking to amend the Employees’ Compensation Act in a way that could undermine workers’ rights, Faleye said the agency’s proposals were aimed at improving enforcement, not weakening protections.
“As an organisation seeking to enhance its operational efficiency, we have engaged with the National Assembly through our annual retreats, attended by other tripartite stakeholders. At those retreats, we made suggestions and recommendations to members of the National Assembly, which we believe will further enhance compliance with the Employees’ Compensation Scheme,” the agency stated.
One of those recommendations, among others, is the need to give NSITF more powers to enforce compliance with the ECA on defaulting employers. This recommendation will better enhance and protect workers’ rights rather than undermine them.
The executive added that any further legislative action rests with the National Assembly. “As an organisation, it is not within our purview to make laws or stop the process of an amendment of any act by the National Assembly. That power resides solely with the legislature. On our part, we have resolved to engage the process at the appropriate time during stakeholders’ engagement exercises for such amendments, and we will advise all stakeholders to also engage appropriately so we can have an inclusive law when completed,” Faleye said.
The NLC had also raised concerns over the non-constitution of the PenCom, describing the situation as a serious breach of the law that could undermine oversight of workers’ retirement savings.
In a statement issued last week by its Central Working Committee, the NLC said the absence of a fully constituted board contravenes the PenCom Act and other relevant statutes. The union warned that the current vacuum allows the federal government to exercise unilateral control over pension funds contributed by workers and employers, weakening statutory tripartite oversight and increasing the risk of mismanagement and political interference.
“The NLC notes with grave concern the non-constitution of the Governing Board of PenCom, in contravention of the PenCom Act and other statutes. This unlawful vacuum has allowed the government to solely superintend over the pension funds contributed by workers and employers, stripping away the statutory tripartite oversight and increasing the risk of mismanagement and political interference,” the statement said.
The labour union stressed that pension funds represent deferred wages for workers, not government revenue, and called for immediate action to restore proper governance. “We demand the immediate constitution of the PenCom Board in full compliance with the law,” the NLC added.
Section 19 of the Pension Reform Act 2014 provides for a 16-member PenCom Governing Board. The President appoints the Chairman, Director General, and four full-time Commissioners, subject to Senate approval. The remaining ten seats are reserved for representatives from key stakeholders, including the NLC, Trade Union Congress, Nigeria Union of Pensioners, and the Nigeria Employers’ Consultative Association.
The previous board was dissolved on 16 June 2023, along with other federal parastatal boards, following a directive from President Bola Tinubu. While several boards have since been reconstituted, PenCom’s board remains incomplete.
Director-General, Omolola Oloworaran, was appointed on 13 July 2024 and confirmed by the Senate on 21 November 2024, but the Chairman and four full-time Commissioners have not yet been named. Once appointed, institutions, including the Central Bank, Securities and Exchange Commission, and Federal Ministry of Finance, will nominate their representatives.
The Director, Centre for Pension Rights Advocacy, Ivor Takor, said the delay in reconstituting the board is a legitimate concern. “The NLC’s call for the prompt reconstitution of the board is consistent with the Pension Reform Act 2014,” the executive told The PUNCH.
On the NLC’s request for pension fund accounts, Takor explained two types of funds: administrative funds managed by PenCom and pension assets held by Pension Fund Administrators.
“PenCom administrative funds are reported to the Governing Board, and it is the responsibility of board representatives to relay information to the NLC,” he said. “In the absence of a full board, this process is delayed.”
Pension assets managed by PFAs are invested and reported to PenCom, which consolidates and publishes monthly, quarterly, and annual reports. Section 36(3) of the Act requires PenCom to publish its annual report, including audited statements, in at least three national newspapers within six months of the financial year-end. These reports are publicly accessible, including to the NLC.
Takor said the NLC’s concerns about the board delay are valid, but its demand for direct access to pension fund reports is not supported by law.
Consumer rights advocate, Moses Igbrude, called for negotiation rather than strikes. “Everything is not about strikes but dispute resolution. Both parties should meet, table issues, and agree on an acceptable position before escalation,” he said.
The NLC has been increasingly vocal on issues ranging from fuel subsidy removal to electricity tariff hikes and minimum wage negotiations. Adding pension protection to the list of disputes could further strain an already tense relationship.
The Nigeria Employers’ Consultative Association, however, supported parts of the NLC’s position, particularly the demand for the federal government to constitute a governing board for PenCom. NECA argued that the absence of a board undermined regulatory credibility and limited effective oversight of pension administration.
“Not constituting the board is a violation of the Act. Since this government has shown respect for due process and the rule of law, we expect that this important step should be taken,” NECA Director-General, Adewale-Smatt Oyerinde, told The PUNCH.
The agency insisted that despite the disruption, workers’ funds remained safe and secure. It described the contributions as “ring-fenced assets” that could not be diverted without trace.
“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,” the agency stressed.
Earlier, PenCom confirmed that retirement savings accounts remain secure and that no pension assets under its management have been diverted.
Head of Corporate Communications at PenCom, Ibrahim Buwal, told The PUNCH that contributors receive monthly or quarterly statements of their Retirement Savings Accounts, adding, “Nobody’s money is missing. I can confirm there are no pension funds under the CPS that are unaccounted for.”
