Nigeria Social Insurance Trust Fund (NSITF): Full Info


The origin of the Nigeria Social Insurance Trust Fund (NSITF) can be traced to the Provident Fund Scheme which later became the Social Insurance Scheme. The NSITF is currently known as the Employees’ Compensation Scheme.
The predecessor of NSITF, the National Provident Fund (NPF) was established by an Act of Parliament in 1961 to provide a poverty alleviation measure as required by convention No.102 of the International Labour Organization (ILO).

At this time, the goal of the scheme was to protect private sector employees (whose employers were then mostly multinationals) from financial difficulties in the event of either old age, cessation of employment, invalidity or death. Most employers didn’t have any scheme like this in place at that time.

nigeria social insurance trust fund

The scheme was a sort of compulsory savings scheme in the form of a monthly contribution by members at the rate of 6% of basic salary subject to a maximum of N8.00 per month or a sum total of N96.00 per annum to be paid in equal proportion by the employer and the employee. In the event of emigration from the country, employment cessation, old age, invalidity or death, the cumulative amount contributed plus accrued interest (7% as at 1994) is calculated on a compound basis and paid to the contributor or his/her dependent as the case may be. The Act was later amended by another Act of Parliament in 1962 to cover only employees in the private sector who were not covered by the Pension Service Scheme.

However, there was a unanimous by the different labour unions including the ILO that the organization had not satisfactorily performed its responsibilities. This led to the Federal Government setting up the Nigeria Social Insurance Trust Fund (NSITF) which was launched by the Honourable Minister of Employment, Labour and Productivity, officially launched the new scheme in July 1994.

Based on this scheme, all Nigerian employers in the private sector were to contribute monthly and the organization was expected to remit this sum.

This scheme would enable the employer provide the following benefits:

  • Retirement pension benefit
  • Survivors benefit
  • Retirement grant
  • Death grant
  • Invalidity benefit
  • Invalidity grant and such other benefits as may be approved from time to time by the Board.
ALSO READ:  10 Best Civil Engineering Companies in Nigeria

In 2002, a new rate of contribution was implemented after the scheme was reviewed. This new scheme meant that the pension and grants on offer available was more than the employees’ contributions.

Between 5 to 25% of the pension contributions is allowed to be used to meet the administrative costs while the surplus was invested in a safe liquid and profitable investments which enabled the NSITF generate income for the payment of benefits.

Generally, the cost of administration was usually higher at inception of the scheme but tends to become progressively lower as the scheme matures.

The registered members were entitled to receive pension and grants that they benefit from once they attain the retirement age (55-60 years) or as a result of death or invalidity.

In the case of death, the pension would be paid to the survivors while it is paid directly to the person in situation of invalidity.

In 2004, there was a twist and the Pension Reform Act (PRA) was enacted leading to the NSITF ceeding its pension’s business in compliance with the Section 42 of the PRA.

As a result, the NSITF incorporated a subsidiary company in 2004 which was the Trustfund Pensions Plc. This company partnered with the likes of Mainstreet Bank, Denham Management Limited, Nigeria Employers Consultative Association, Nigeria Labour Congress and the Trade Union Congress that same year.

However, NSITF owned majority shares of Trustfund Pensions Plc. The company was licensed by the National Pension Commission in December 2005 which led to its commencement of activities in January 2006. At that time, the company had assets in excess of N54 billion.

Additionally, the PRA of 2004 redefined the mandate of the Fund to provide social security insurances services other than pension according to section 71(2).

In 2010, the Employees Compensation Act was passed into law by President Goodluck Jonathan which backed the mandate of the NSITF to provide social security insurance services specifically by operating the Employment Compensation Scheme (ECS).

ALSO READ:  Skye Bank Branches In Lagos

Below is an overview of the Act:

The Employees’ Compensation ACT 2010 establishes the Employees Compensation Scheme (ECS) to replace the workmen’s Compensation scheme in line with global best practices and trends. The ECS provides adequate and timely compensation for employees who suffer injuries/diseases in the course of their employment.

Additionally, the Act provides rehabilitation for injured employees in work places and replacement of loss of productivity to the employer. It is a no-fault claim scheme. The funds generated from the scheme are being invested in other basic social security services.

Subsequently, in 2011, the strategy was to ensure that the ECS became a reality. The objectives of the scheme include:

  • To provide for an open and fair system of guaranteed and adequate compensation for all employees or their dependents for any death, injury, disease or disability arising out of or in the course of employment
  • To provide rehabilitation to employees with work disability as much as possible;
  • To establish and maintain a solvent compensation fund managed in the interest of employees and employers;
  • To provide for fair and adequate assessments for employers;
  • To provide an appeal procedure that is simple, fair and accessible, with minimal delays; and
  • To combine efforts and resources of relevant stakeholders for the prevention of workplace disabilities, including the enforcement of occupational safety and health standard.

Overall, the vision of the NSITF is to become the foremost Social Security institution in Africa, setting the agenda for change, social policy, economic empowerment and poverty alleviation in Nigeria.

The core values of the NSITF include

  • Human Capital Development
  • Professional Management and Good Corporate Governance
  • Security of Investible Funds.
  • Social Responsibility and Advocacy
  • Transparency and Accountability

Also the NSITF is involved in the following:

  • Endowing a chair on social security studies
  • Health and safety education
  • Affordable housing scheme
  • Social assistance for the less privileged and aged
  • Vocational rehabilitation.

Advertise Here
Click For More Information


Share This Post With Your Friends...
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedIn

You’ll Love These Posts…

Leave a Reply

Your email address will not be published. Required fields are marked *

Nigerian Finder © 2017