NHF Contributions: Are You Compliant? A Checklist for Nigerian Employers
The National Housing Fund (NHF) is one of Nigeria's less-discussed statutory deductions — which means it is also one of the most commonly missed. Many employers who are fully compliant on PAYE and pension have never properly set up NHF contributions, either because they did not know about it, misunderstood the requirement, or deprioritised it.
This checklist is designed to help you verify your NHF compliance status and correct any gaps.
What Is the NHF?
The National Housing Fund is a federal government scheme created by the National Housing Fund Act of 1992. Its purpose is to pool contributions from Nigerian workers to finance affordable housing across the country.
Workers who contribute to the NHF are eligible to apply for low-interest housing loans from the Federal Mortgage Bank of Nigeria (FMBN). The scheme is intended to make home ownership more accessible to Nigerian workers who would not otherwise qualify for commercial mortgage loans.
Who Is Required to Contribute?
Under the NHF Act, all Nigerians in paid employment — in both the public and private sectors — who earn at least N3,000 per month are required to contribute to the NHF.
Given that N3,000 is effectively the entire employed workforce of Nigeria, this requirement applies to virtually every employee you have. There is no upper income limit.
Self-employed individuals are also encouraged to participate, though enforcement is less consistent.
How Much Is the Contribution?
The NHF contribution rate is 2.5% of the employee's basic salary.
This is calculated on basic salary only — not on total emolument. If an employee earns a basic salary of N200,000 per month, the NHF contribution is N5,000.
The contribution is:
- Deducted from the employee's pay (not an employer top-up like pension)
- Based on basic salary only
- Remitted to the Federal Mortgage Bank of Nigeria (FMBN)
Employer Obligations Checklist
Use this checklist to verify your compliance:
Registration
- Your company is registered with the FMBN as a contributing employer
- Each employee has an NHF registration number (obtained by completing FMBN Form 1)
- New employees are enrolled in the NHF scheme within 30 days of joining
Monthly Deductions
- NHF of 2.5% is being deducted from each employee's basic salary every month
- The deduction is applied to basic salary only (not housing, transport, or other allowances)
- The deduction appears on each employee's monthly payslip
Remittance
- NHF deductions are remitted to the FMBN monthly
- Remittances are made with the correct schedule identifying each employee's NHF number
- Remittances are completed by the end of the month following the deduction month
Record Keeping
- Monthly remittance evidence is filed and retained
- Employee NHF registration numbers are recorded and updated
- Annual returns are filed with the FMBN where required
Common Compliance Gaps
Not registered at all. Many private sector employers — particularly smaller companies — have never registered with the FMBN and have never made NHF contributions. This is an exposure that grows with every passing month.
Contributing on gross instead of basic. NHF is 2.5% of basic salary, not gross emolument. Employers who contribute on gross pay are over-contributing. Those who contribute on net pay may be under-contributing depending on their salary structure.
Remitting to the wrong account. FMBN remittance details should be verified directly with the bank. Using outdated account information is a common source of remittance failures.
Not enrolling new employees. An employee who has not been given an NHF number cannot receive credit for their contributions. Enrolment is a separate step from deduction.
Penalties for Non-Compliance
The NHF Act provides for penalties for employers who fail to deduct or remit contributions. These include:
- Fines
- Prosecution
- Back-payment of all contributions due with interest
While NHF enforcement has historically been less aggressive than PAYE or pension enforcement, the FMBN has been increasing its audit activity. More importantly, if a comprehensive payroll audit is triggered by a PAYE or pension issue, NHF non-compliance will also be discovered and addressed.
How to Get Compliant If You Are Behind
If your company has not been making NHF contributions, the steps are:
Register with FMBN as an employer. Visit an FMBN branch or their website to complete employer registration.
Register each employee individually using FMBN Form 1. Each employee receives a unique NHF number.
Start making current-month contributions. Begin deducting and remitting for the current period.
Address historical liability. This is the most sensitive part. The FMBN can assess back contributions. Some companies approach this by engaging directly with FMBN to agree a regularisation arrangement. Others consult with a tax or HR compliance specialist before approaching the FMBN. This decision depends on the size of the potential historical liability.
NHF and Your Employees
From the employee perspective, NHF contributions are an asset. Employees who have contributed for a minimum of six months are eligible to apply for an NHF loan from the FMBN at below-market interest rates.
Many employees in Nigeria are unaware of this benefit. Part of your obligation as an employer is to ensure employees are registered and contributing so they can access the scheme's benefits if they choose to.
Summary
NHF compliance for Nigerian employers requires:
- Registration with FMBN as a contributing employer
- Individual NHF registration for every employee
- Monthly deduction of 2.5% of each employee's basic salary
- Monthly remittance to FMBN with employee-level schedules
- Ongoing record-keeping
If you are not currently compliant, the risk grows each month. The process to regularise is manageable but it requires deliberate action.
BetternshipHR includes NHF calculations in its automated payroll engine, tracking deductions and remittance obligations alongside PAYE and pension. Start free at employer.betternship.com.