So far, most of our articles have focused on developments around the End-of-Service Benefits (EOSB) in the United Arab Emirates (UAE). But similar reforms have been also been progressing across the wider Gulf Cooperation Council (GCC) region.

Over the next couple of weeks, we’ll bring you up to speed on what the UAE’s neighbours are doing, and what this means for the region as a whole. We begin with the Sultanate of Oman.

The Social Protection Fund and Royal Decree No. 52/2023

In 2021, Oman established the Social Protection Fund (SPF) as the central authority for all social protection programmes. Its mandate is extensive, covering benefits for the elderly, disabled persons, widows, orphans, and a comprehensive set of insurance protections including old-age, disability, death, workplace injuries, sick leave, maternity leave and more.

Thereafter, the introduction of Royal Decree No. 52/2023 which issued the Social Protection Law, paved the way for the traditional EOSB Gratuity system to be replaced with a funded savings-based scheme, called the Provident Scheme.

The Provident Scheme

The Provident Scheme is a fixed-contribution, savings-based program designed primarily to replace EOSB gratuity for non-Omani (expatriate) employees. It also functions as a voluntary supplementary savings vehicle for Omani employees and for any employee whose salary exceeds the pensionable wage ceiling.

Once implemented, all non-Omani employees must be enrolled in the Provident Scheme.

The Law specifies that a mandatory 9% contribution of basic salary should be paid into the Provident Scheme each month (most public commentary assumes that contributions will be fully employer-funded).

In other words, there is only one central scheme – the Provident Scheme – and it’s managed and administered by the government through the SPF. The SPF is overseen by a Social Protection Benefits Entitlement Committee, which includes representatives from relevant ministries and entities, ensuring professional and transparent fund management.

Where will the contributions be invested? The Provident Scheme is described by the SPF as an investment-based vehicle where contributions and investment returns will accumulate in individual accounts. However, no details have yet been released on investment strategy, asset allocation, risk profile, return objectives, fees, and whether any minimum return is guaranteed. These are expected to be announced in due course.

Implementation deadline now set for 19 July 2027

More recently, Royal Decree No. 60/2025 amended parts of the Social Protection Law, including the implementation timeline for the Provident Scheme.

The savings system for non-Omani workers will now come into force on 19 July 2027, one year later than originally planned. This extension is widely viewed as an effort to ensure operational readiness and smooth implementation, and it also provides employers with more time to prepare.

That means by July 2027, all employers with non-Omani employees will be required to register them under the Provident Scheme.

What happens to Gratuity earned before the switch?

As in the UAE, Oman’s law makes explicit provisions for accrued EOSB gratuity earned up to the date the new system begins.

Under Article 138 of the Social Protection Law, employers must settle gratuity accrued up to the switchover date, either:

• by paying it directly to the employee at the time of termination (per the Labour Law); or
• by transferring the accrued amount into the employee’s Provident Scheme account, once the scheme is active.

Conclusion: Oman vs. UAE – Who got it right?

Both Oman and the UAE are trying to fix the same problem with the traditional gratuity system by moving towards a structured funded savings scheme but have taken entirely different approaches.

Oman has opted for a single, government-run Provident Scheme with a firm rollout deadline of July 2027. This creates clarity and uniformity across the market, however, many key details (including how the scheme will invest its assets) are still pending.

The UAE, by contrast, is taking a completely different route. Instead of one national fund, it has opened the door to multiple private providers/fund managers, each offering different investment options within the specified guidelines. This offers employers and employees a greater degree of investment choice and promotes healthy competition. The UAE has also opted to introduce the scheme on voluntary basis to fine tune the system before a mandatory rollout.

So, which approach is better?

For now, it’s too early to say which approach will deliver better results. While we at Pensions Monitor naturally lean towards a more free market-based approached like the UAE has adopted, both countries are still in early stages of building their systems, and neither has enough real-world data yet. At Pensions Monitor, we’ll continue tracking Oman’s Provident Scheme just as we do in the UAE, and we look forward to comparing both models once the results start to show over the next couple of years.

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