The Federal Government has pledged to reverse deductions from the Employees’ Compensation Scheme (ECS) managed by the Nigeria Social Insurance Trust Fund (NSITF), in a bid to ease tensions with the Nigeria Labour Congress (NLC) following threats of a nationwide strike.
Last week, the NLC accused the government of diverting 40 per cent of NSITF contributions into the federal treasury, describing the move as an attack on workers’ social protection. The union demanded an immediate refund and the full reconstitution of the National Pension Commission (PenCom) board, warning that non-compliance could trigger nationwide industrial action.
The Employees’ Compensation Scheme is designed to provide financial support to employees who suffer work-related injuries, illnesses, disabilities, or death. It is funded solely by employer contributions, typically one per cent of monthly payroll, with no deductions from workers.
In a letter dated August 16, 2025, NSITF Managing Director, Oluwaseun Faleye, confirmed that deductions had been made but argued they were not diversions. He explained that the deductions stemmed from a federal policy introduced in December 2023 requiring government-owned enterprises to remit 50 per cent of their internally generated revenue (IGR) to the treasury. The measure, introduced by the Ministry of Finance, was aimed at boosting revenue and narrowing the fiscal deficit.
Faleye said a directive from the Accountant-General of the Federation in March 2024 halted deductions from workers’ contributions, and partial refunds have since been processed. He noted, however, that deductions on investment income from contributions were still ongoing, though discussions with the Budget Office and Finance Ministry were underway to end the practice.
“We have been assured that no further deductions will be made from contributions or investment proceeds,” Faleye stated.
NLC’s Position
Responding, NLC Assistant General Secretary, Christopher Onyeka, said the union’s executive council would review NSITF’s letter before deciding on strike action. He insisted that NSITF funds were not government revenue but social protection contributions that should remain untouchable.
“These funds are meant to compensate workers in cases of injury. Classifying NSITF as a revenue-generating agency undermines workers’ rights,” Onyeka said.
The NLC also rejected claims that NSITF sought to amend the Employees’ Compensation Act in ways that could weaken protections. Faleye clarified that the agency’s proposals aimed at strengthening compliance and enforcement against defaulting employers, not undermining worker safeguards.
Pension Concerns
Beyond compensation funds, the NLC also raised alarm over the prolonged non-constitution of the PenCom Governing Board, describing it as a breach of the Pension Reform Act 2014. The union warned that the vacuum gives the federal government unilateral control over workers’ pension funds, exposing them to risks of mismanagement and political interference.
Section 19 of the Act provides for a 16-member board comprising government officials, labour representatives, and employers. While PenCom’s Director-General was appointed in 2024, the board remains incomplete more than a year after it was dissolved alongside other parastatal boards in June 2023.
Pension rights advocates have also backed labour’s call, stressing that the absence of a governing board undermines oversight and transparency.
Wider Labour Disputes
The latest dispute adds to a growing list of issues between the government and organised labour, including the removal of fuel subsidies, electricity tariff hikes, and minimum wage negotiations. The NLC has maintained that both pension and compensation funds represent workers’ deferred wages and cannot be treated as revenue for fiscal policy purposes.
Meanwhile, the Nigeria Employers’ Consultative Association (NECA) also urged the government to constitute the PenCom board, warning that failure to do so undermines regulatory credibility.
NSITF, however, assured that despite disruptions, workers’ funds remain secure.
“Every contribution is accounted for. The Employees’ Compensation Scheme is intact. The deductions arose from a general revenue policy not tailored to our operations,” Faleye reiterated.
PenCom also confirmed that contributors’ retirement savings accounts remain safe, with balances available in monthly or quarterly statements.
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