From the inception of the Nigerian Navy in 1956, the payment of Nigerian Navy/Civilian emoluments were decentralized. The NN pay department commenced as a sub-unit operating under the command pay office. The salaries of NN personnel and civilian staff were paid at the command levels. It was convenient given the small size of the NN in terms of the number of personnel and ships. However, with the rapid expansionary naval policies of the various administrations came the rapid expansion of the NN. Hence, the need to appraise the status quo in all ramifications including the payment of salaries became relevant.

In order to conveniently monitor and effectively manage the payment of personnel emolument in view of the increasing number, and manning policy, the need for a centralized pay system for all personnel and civilians under the Navy was conceived. Thus, NNO 01/85 dated 5th of March, 1985  was promulgated by V/Adm AA Aikhomu, the then CNS, to take effect from 1st of April 1985.

The Centralized pay office gave rise to other  functions and management of personnel cost as stipulated in the NNO.

Functions      
The functions of central pay office as stipulated by NNO 01/85 are as follows:
a. Management and control of personnel cost and vote.
b. Maintenance of up-to-date individual pay cards of officers, ratings
and civilian staff
c. Payment of salaries of officers, ratings and civilian staff.
d. Computerization of the pay system
e. Compilation of data for personnel cost budget.
f.  Security of pay information and records.

With these enormous responsibilities came other implied responsibility not stated therein in the NNO. Furthermore, as time went by coupled with developmental changes in the system and financial landscape in general. The need to in corporate other responsibilities arose.

These included but not limited to the following:
a. Collection of tax clearance certificate on behalf of NN and civilian
personnel.
b. Regular and prompt payment of salaries and remittance of the
various deductions to the relevant authorities. e.g. PAYEE Tax,
National Housing Fund etc.
c. Provision of monthly pay slip and other related information to
personnel and civilians.
e. Developing and implementing combative and effective internal
control to prevent and detect fraud.