UAE EOSB Savings Scheme Guide

What is the UAE EOSB Savings Scheme?

The United Arab Emirates (UAE) has traditionally operated two different end-of-service benefit systems. UAE and GCC nationals generally participate in state pension schemes, while expatriate employees receive an end-of-service gratuity when employment ends under the UAE Labour Law.

Key limitation of the traditional gratuity system

While the gratuity system has served the UAE well, it has one important limitation: gratuity is an unfunded employer liability with no requirement to set cash aside each month. As businesses grow, this creates three compounding risks:

Balance sheet exposure

Growing with every salary increment and year of service.

Cash flow pressure

When many employees leave simultaneously.

Employee benefit uncertainty

Entitlements depend on the employer's ability to pay.

The UAE EOSB Savings Scheme offers employers an alternative. Instead of carrying gratuity as an unfunded liability, participating employers make regular monthly contributions into approved investment funds held in each employee's name, progressively funding benefits throughout employment rather than at separation, and making employer liabilities more predictable.

How the two systems compare

Traditional gratuity vs the EOSB Savings Scheme.
TRADITIONAL GRATUITY	EOSB SAVINGS SCHEME
Employer liability	Monthly funding
Paid at the end of employment	Built up progressively
Exposed to employer solvency	Ring-fenced and held in an employee's EOSB account
No investment growth	Potential investment returns

The transition to funded EOSB schemes extends beyond the UAE

Across the GCC, governments are introducing funded schemes to better protect employee benefits and modernise labour markets that have long relied on unfunded gratuity systems.

GCC EOSB Transition Status | As at 30 June 2026
COUNTRY	EOSB SYSTEM DIRECTION	STATUS	UPTAKE
UAE	Gratuity → Savings Scheme	Live (public consultation ended 28 Feb 2026)	Voluntary
BAH	Gratuity → Funded Scheme	Live	Mandatory (Mar 2024)
OMR	Gratuity → Savings Scheme	Live from July 2027	Mandatory (Jul 2027)
QAR	Gratuity → Savings Scheme	Under evaluation since Dec 2025	TBA
KSA	Gratuity	Employee saving scheme announced (Jun 2025)	TBA
KWT	Gratuity	No announcement	-

Two jurisdictions have already announced or implemented mandatory schemes, and reform activity continues across the region. The outcome of the public consultation of the UAE EOSB Savings Scheme (closed since February 2026) is still awaited.

For UAE employers, the question is therefore no longer whether a funded EOSB scheme will become the new standard. The question is when, and whether your organisation will be ready.

Who can participate?

UAE private sector employers
Non-financial free zone employers
ADGM employers (opt-in)

Download the complete Guide

Register your employer account once to download the guide, receive future editions, and keep learning with Vestora.

Register to download the guide

How does the UAE EOSB Savings Scheme work?

Like most workplace savings schemes, the UAE EOSB Savings Scheme can broadly be described in four steps, from employer onboarding to employees accessing their savings. Because participation in the UAE EOSB Savings Scheme is currently voluntary, employers have flexibility in areas such as employee selection and transition date.

Overview of how the scheme works

Employer joins scheme
Select an Approved Provider
Complete onboarding procedures.
Select employees
Participation is mandatory for chosen employees.
Minimum participation: 12 months.
Set transition date
This date is the dividing line between:
- Past service; and
- Future service.
Past service
Calculate and freeze gratuity.
- Pay on employee exit; or
- Transfer lumpsum to scheme.
Future service
Replace gratuity accruals with monthly EOSB contributions.
Monthly contributions begin
Mandatory Employer Contributions
Paid monthly.
Due within 15 days of month-end.
Late payment penalties apply.
Contribution rates on basic salary
Less than 5 years of service: 5.83%
Five or more years of service: 8.33%
Service is measured from start date of employment. Contributions may be recovered if employment ends within the first year.
Employer Top-Ups
Optional additional contributions.
May include matching and vesting.
May qualify for Corporate Tax relief.
Additional Voluntary Contributions
AVCs up to 25% of total salary.
Process as payroll deduction or direct transfer by employee.
Contributions are invested
Regulated EOSB investment funds
CMA regulated.
UAE domiciled.
Capital Guarantee or Risk-based.
Shariah-compliant funds available.
Capital Guarantee Funds
Preserves capital.
Default Fund.
Risk-based funds
Long-term growth potential.
Higher investment risk.
Strategy varies by fund.
Investment choice and risk
Employees earning above AED 4,000/month may choose risk-based funds. Others remain in the Default Fund.
Employees bear investment risk.
Benefits become available
Withdrawal of EOSB savings
Employees can access savings on:
- End of employment; or
- Death (paid to nominee)
Keep EOSB savings invested
Employees may keep their EOSB savings invested after leaving employment rather than withdraw immediately, particularly when markets are volatile.
For employees
Individual EOSB account.
Security of end-of-service dues.
Visibility over savings.
Investment choice (where eligible).
Opportunity for long-term growth.

The UAE EOSB Savings Scheme transforms EOSB from an unfunded employer promise to ring-fenced savings that are funded throughout employment and held in the employee's EOSB account.

Who are the Approved Providers for the UAE EOSB Savings Scheme?

As at 30 June 2026, employers can choose from the following Approved Providers under the UAE EOSB Savings Scheme. The scheme is overseen by the Ministry of Human Resources and Emiratisation (MOHRE) and the Capital Markets Authority (CMA).

APPROVED PROVIDERS | As at 30 June 2026

Daman Investments
First Abu Dhabi Bank
Lunate (Ghaf Benefits)
National Bonds

All Approved Providers operate within the same regulatory framework but use different service providers to administer the scheme. As such, employers may notice differences in investment options, fees, digital experience and customer service. Additional Approved Providers may enter the market over time, giving employers more choice.

Why join a voluntary scheme?

Although participation is voluntary, many employers are choosing to join the UAE EOSB Savings Scheme because the scheme improves financial planning, strengthens employee value proposition and prepares organisations for future reform. Each organisation must assess the opportunity in its own context.

Strategic reasons to join early

Cost Savings: Past & Future Service
Past service gratuity is frozen on transition. No further increases, no upfront funding required. Future service contributions are based on current basic salary, not final salary. Together, both reduce EOSB costs over time for employers with regular salary increases.
Improve Cashflow Planning
Replace unpredictable end-of-service payments with predictable monthly contributions, making budgeting and cashflow management easier.
Enhance Employee Value Proposition
Employees receive a funded EOSB account in their own name, giving them visibility, security, control (where eligible) and access to locally regulated EOSB framework to contribute more and grow their savings. This can strengthen recruitment and retention.
Implement on your own timeline
Join gradually and refine internal processes before onboarding all employees. Employers who prepare early will be well-positioned to manage implementation without regulatory time pressure.

For eligible employers, the UAE EOSB Savings Scheme is currently the only scheme that replaces statutory gratuity from the transition date for enrolled employees. Other workplace savings or pension schemes may complement employee benefits but do not replace gratuity obligations under the UAE Labour Law.

How employee savings are protected?

The UAE EOSB Savings Scheme has been designed with multiple safeguards to protect employee benefits while providing the opportunity for long-term investment growth.

REGULATED

MOHRE & CMA Oversight

Only MOHRE-approved, CMA-licensed Investment Fund Managers may operate under the scheme.

PROTECTED

Ring-fenced Savings

Contributions are held in regulated employee EOSB accounts, separate from employer assets.

MANAGED RISK

Capital Protected

Every provider offers a Capital Guarantee Fund alongside diversified investment options.

FLEXIBLE

Employee Choice

Employees may choose investment options (where eligible) and remain invested after leaving employment.

The UAE EOSB Savings Scheme combines regulation, ring-fenced accounts, managed investment risk and employee choice to provide greater security than the traditional gratuity system.

What changes when employers join the scheme?

Joining the UAE EOSB Savings Scheme introduces new responsibilities for HR, Finance, and Payroll teams. The implementation workload should not be underestimated but it is manageable with the right preparation.

Who is involved?

Implementation typically involves multiple business functions.

LEADERSHIP

Approves strategy and provider selection

HUMAN RESOURCES

Coordinates enrolment and communications

PAYROLL

Processes monthly contributions

FINANCE

Manages budgeting, liabilities and reporting

LEGAL & COMPLIANCE

Reviews contracts and regulatory compliance

IT SUPPORT

Supports data and systems (if required)

General implementation checklist

Before enrolment

Assess the financial impact of transitioning.
Determine transition date.
Determine rollout plan (phased or all employees).
Select an Approved Provider.
Complete scheme onboarding procedures.
Review employment contracts.
Review HR systems and internal processes.
Prepare employee communications.

After enrolment

Transfer past service gratuity to the scheme (if opted).
Manage past service gratuity obligations (if retained).
Process monthly EOSB contributions for future service.
Manage joiners and leavers.
Reconcile monthly contributions.
Process employer top-ups (where offered) and AVCs.
Monitor provider performance and market updates.
Maintain regular employee communications.

Implementation is a one-time exercise that involves multiple business functions. Once established, the scheme becomes part of normal HR, payroll and finance operations. Employers who prepare early are likely to experience a smoother transition.

Where would you like to go next?

This guide provides an introduction to the UAE EOSB Savings Scheme. As the market continues to develop, Vestora offers practical resources to help employers and employees continue learning, prepare their organisation and stay informed.

Choose the path that matches your current priorities

I'm learning about the scheme

Learn the fundamentals.

I'm preparing my organisation

Plan your implementation.

I'd like to stay informed

Follow market developments.

Start your EOSB journey with My Vestora

Create your free Vestora account to access employer learning, provider comparisons, implementation resources and the latest EOSB market insights, all from one personalised dashboard.

Create your free My Vestora account

Disclaimer - This guide is provided for general educational and informational purposes only and does not constitute legal, tax, investment or financial advice. While every effort has been made to ensure the accuracy of the information, regulations and the EOSB landscape may change over time. Employers and employees should seek independent professional advice appropriate to their circumstances.

UAE EOSB Savings Scheme