Revitalizing NSITF | A Blueprint for Enhanced Social Security Delivery.The current government, led by Tinubu, has placed a strong emphasis on the growth of Small, Medium and Large Enterprises (SMLE) as a key agenda. This prioritization of worker welfare is crucial for driving economic growth and productivity.
Revitalizing NSITF | A Blueprint for Enhanced Social Security Delivery
The Nigeria Social Insurance Trust Fund (NSITF) plays a vital role in fulfilling the government’s social responsibilities to Nigerian workers, especially in the face of increasing work-related hazards. However, the coverage of NSITF is limited, and there is a pressing need to reposition the agency for effective social security delivery.
NSITF, initially known as the National Provident Fund (NPF), was established in 1961 to cater to non-pensionable employees, including casual workers in the Federal Government. It operated as a Savings Scheme based on defined contributions, but over time, inflation eroded the value of payments. Problems with record-keeping and lack of digitization led to a review of the scheme in 1994, transforming it into a Trust Fund providing limited Social Insurance benefits to private sector employees.
The Pension Reform Act of 2004 mandated NSITF to transfer pension assets to Pension Fund Administrators (PFA) and focus on other Social Security Services. This shift aimed to align with the ILO Convention 102 of 1952 on Social Security. NSITF subsequently established a PFA and transferred pension assets, leading to the enactment of the Employees Compensation Act 2010 (Work Injury Scheme).
NSITF and the Commercialization Program
The Privatisation and Commercialization Act No. 25 of 1988 provided the legal framework for transforming NSITF from a department under the Ministry of Labour to a partly commercialized corporate institution. The Nigeria Social Insurance Trust Fund Act No. 73 of 1993 further defined its operations and management structure. The government redefined the roles of supervisory ministries to reduce interference in NSITF’s management.
Recommendations for Repositioning NSITF
- Separate Custody of Funds: Amend the Employee’s Compensation Act and NSITF Act to separate the custody of funds from the managers of the Fund, similar to the Pension Reform Act. This will address the issue of mismanagement.
- Reduce Overhead Costs: Prioritize the payment of benefits to qualified beneficiaries and their dependants over unnecessary expenditures that do not add value to NSITF.
- Qualification-Based Appointments: Appoint the Board and Executive Management based on qualification, experience, and suitability to address mismanagement issues.
- Annual General Meeting: Institute an annual general meeting of all stakeholders for transparency and accountability in NSITF’s operations.
- Controlled Recruitment: Implement controlled recruitment, especially at the management level, focusing on individuals with global knowledge and capacity.
- Government Funding: Government should fully bear the cost of administration, including staff salaries, to reduce excessive recruitment and ensure proper staff welfare.
- Pension Review Resolution: Speedily resolve the lingering issue of pension review for retired staff of NSITF under the defunct defined benefit scheme.
- Optimum Staffing: Determine the optimum level of staffing required by NSITF and work towards achieving it.
Repositioning NSITF for effective social security delivery is imperative to ensure the welfare and protection of Nigerian workers. Implementing these recommendations will help NSITF fulfill its role as the premier Social Security institution in Nigeria and provide comprehensive benefits to employees.