NHF, NSITF, ITF and NHIA: the other statutory payments Nigerian employers make

PAYE and pension get all the attention, but a Nigerian payroll has four other schemes to think about. Two of them are pure employer costs, one is an employee deduction, and one depends on how you’ve set up health cover. All four get checked when regulators or auditors come calling.

The short version

Scheme	Who pays	Rate	Base	Frequency
NSITF (Employee Compensation Scheme)	Employer	1%	Total monthly payroll	Monthly
ITF (Industrial Training Fund)	Employer	1%	Total annual payroll	Once a year
NHF (National Housing Fund)	Employee	2.5%	Basic salary	Monthly
NHIA (health insurance)	Employer, and often employee	Depends on the plan	Depends on the plan	Monthly or per contract

NSITF: the Employee Compensation Scheme

Under the Employee’s Compensation Act 2010, every employer pays 1% of total monthly payroll to the Nigeria Social Insurance Trust Fund. There is no headcount threshold, so a business with two staff pays it too.

The money funds compensation for employees injured at work or who get an occupational disease, and for their dependants if they die. It’s an employer cost: nothing is deducted from the employee.

“Total payroll” is broad. It covers basic pay and the regular cash allowances, not only basic salary, so don’t calculate it on the pension base.

Example: a total monthly payroll of ₦10 million means ₦100,000 a month to NSITF.

ITF: the Industrial Training Fund

The ITF levy is 1% of total annual payroll, paid by employers with five or more employees, or an annual turnover of ₦50 million or more. It’s paid once a year, and the return is due by 1 April for the previous year.

Because it’s annual, it’s the levy companies forget most often. Accrue for it monthly in your management accounts so the April bill isn’t a surprise. On the same ₦10 million monthly payroll, the annual levy is ₦1.2 million.

Employers who train their staff can claim back part of the levy through the ITF’s reimbursement scheme, so keep your training records.

NHF: the National Housing Fund

The National Housing Fund Act 1992 sets an employee contribution of 2.5% of basic salary, paid to the Federal Mortgage Bank of Nigeria. There’s no employer contribution. Contributors can later apply for a mortgage from the fund, and the contribution is an allowable deduction for PAYE.

This is where the rules get murky. Since the Business Facilitation reforms of 2023, NHF has widely been treated as optional for private sector employees, while it remains in place for the public sector. Practice varies between employers, and guidance hasn’t settled.

What to do in practice:

• Decide your policy and write it down.
• If you deduct NHF, remit it monthly and give employees their NHF numbers.
• If you treat it as optional, record each employee’s choice.
• Check the FMBN’s current position before you change your approach.

NHIA: health insurance

The National Health Insurance Authority Act 2022 made health insurance compulsory for everyone living in Nigeria, and it expects employers to enrol their staff. Unlike the other three, there’s no single rate. What you pay depends on the scheme or HMO plan you choose and how it’s priced: some are a percentage of basic salary split between employer and employee, and others are a fixed premium per person.

What to do in practice:

• Choose an accredited HMO or scheme and enrol every employee.
• Agree in writing whether you pay the full premium or share it with employees.
• If employees contribute, show it as its own deduction. It’s an allowable deduction for PAYE.

Keeping it all straight

1. Separate employer costs from employee deductions. NSITF and ITF never appear as deductions on a payslip.
2. Use the right base for each scheme. Total payroll for NSITF and ITF, basic salary for NHF, BHT for pension. Using one base for everything is the most common error.
3. Diarise the annual ITF return for 1 April.
4. Keep remittance receipts. Contractors bidding for government work are often asked for NSITF, ITF and pension compliance certificates.

How Eban handles it

Eban’s Nigerian payroll has NSITF, ITF and NHF built in alongside pension and group life, each with its own rate and base. Employer-only costs like NSITF and ITF stay off the payslip but show in your payroll cost reports, and NHF appears as its own deduction. NHF is enrolled per employee, so you can switch it off for anyone who opts out. Health insurance contributions that employees share can be set up as a regular deduction on the payslip.