Skip to main content
main content, press tab to continue
Article | Global News Briefs

Nigeria: Private workers may opt out of Housing Fund contributions

By Ifeoluwa Ojo | June 29, 2023

Private-sector employees in Nigeria may now opt out of contributing to the government-run National Housing Fund, whose performance has fallen short of expectations.
Health and Benefits|Ukupne nagrade |Benessere integrato

Employer Action Code: Act

A new amendment to the National Housing Fund Act of 1992 limits to public employees the compulsory contribution of 2.5% of pay to the government-managed National Housing Fund (NHF). Before the amendment, workers in the private sector were also required to contribute to the NHF at the same rate. The NHF is intended to be a source of affordable housing loans to individuals, supported by funding from the government, banks and insurance companies. NHF participants with no outstanding loans have been entitled to receive a refund of their contributions with interest after attaining age 60 or 35 years of service.

Key details

  • Individual private-sector employees now have the freedom to choose whether or not to participate in the NHF. Employees who opt out and have no outstanding loans are now entitled to receive an immediate refund of their previous NHF contributions, with interest.
  • Employers of those who choose to remain contributors to the NHF must continue to deduct the applicable employee contributions and remit them to the Federal Mortgage Bank of Nigeria.
  • Employers of those who choose to opt out of NHF participation must facilitate the necessary steps (e.g., ceasing contributions) and guide these employees through the process of requesting a refund of their previous NHF contributions.

Employer implications

In a 2020 study, the Central Bank of Nigeria noted several shortcomings in the performance of the NHF, including long processing times for reviewing and approving loan applications (over a year in the majority of cases) and high loan default rates (60% in 2016). In addition, while the loan approval rate was high (84%), apparently only 16% of approved loans actually were disbursed to applicants. Employers have a responsibility to communicate to employees about their rights and available options pertaining to NHF participation and to help employees implement their decisions. Given past NHF challenges, it is likely that a substantial number of employees will opt out of NHF participation.


Ifeoluwa Ojo

Contact us