The National Housing Fund (NHF) Act, Chapter N45 of the Laws of the Federation 2004, mandated Nigerian Schools to deduct and remit an employee’s contributions to the Fund. The sweeping changes introduced under the Business Facilitation Act 2022 render an employee’s contributions optional.
Background
We prepared this Frequently Asked Questions (FAQ) for Nigerian Schools, including pre-school, primary and secondary schools, universities, colleges of education, and business schools.
Although the NHF Act Chapter N45 of the Laws of the Federation 2004 required schools to deduct and remit the prescribed employee’s contribution, the 2022 Business Facilitation Act rendered the employee’s NHF contribution optional.
Given the above, employees in Nigerian Schools may contribute to the NHF. Still, schools must deduct and remit employee’s contributions when each employee elects to contribute to the Fund.
• Did Nigeria repeal or amend the National Housing Fund Act in 2018?
Although Nigeria’s National Assembly passed the National Housing Fund (Establishment) Bill 2018, the President Buhari-led Federal Government did not sign the Bill into law.
There was no 2018 National Housing Fund (Establishment) Act.
• Who is eligible to contribute under the NHF Act 2018?
Any employee in a Nigerian School may choose to contribute to the National Housing Fund. Such an employee’s “take-home pay” must not be the national minimum wage (₦70,000) or more.
Notably, “take-home-pay” means an employee’s basic salary, the monthly income after other statutory deductions, including PAYE and pension.
• What is Nigerian Schools’ compliance with the NHF Act?
Where an employee chooses to contribute to the NHF, a Nigerian School must deduct and remit each employee’s contributions to the Fund – through a designated bank – within 30 days from the salary payment date.
• Who bears the cost of the contribution?
NHF contribution is deductible from the employee’s basic salary. The employee bears the contributed amount and not the school.
However, a Nigerian School may use the NHF contribution to motivate certain employees. A School reserves the right but not a duty to partially or fully bear the contributions.
• Is the Contribution Tax-exempt?
Significantly, the contribution and all repayments therefrom are tax-exempt.
• What is the applicable rate of contribution?
The rate is 2.5% of the employee’s monthly income (basic salary). The Act did not provide for a voluntary upward contribution.
• What are a School’s Liabilities Under the NHF Act 2018?
Nigerian Schools that breach the NHF requirements are liable to pay ₦50,000 penalty for failure to deduct or remit contributions. In comparison, the staff authorized to deduct or remit the contribution must pay a ₦10,000 penalty.
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