Where can Companies get advice for UAE's new EOSB saving scheme?

The UAE’s alternative end-of-service benefit (EOSB) savings regime is creating new opportunities for employers — but also new decision points.

For HR leaders, CFOs and business owners a number of important questions arise:

• Should they switch to the new system now? Or later?

• Should they enrol all, or only some employees?

• Should they re-design their whole approach to employee benefits?

• And: which Fund Manager to choose for the new EOSB scheme?

Many Business Leaders will consider taking professional advice for these crucial questions. But who can actually help?

Who can help?

A range of advisers may be able to assist, depending on the question being asked.

Employee Benefits consultants are an obvious starting point. These firms already advise on pensions, insurance, medical coverage and wider reward design, and may be well placed to help with pension solutions, insurance coverages and employee remuneration questions. HR consultants may also be valuable where the focus is on policy, employee remuneration, industry comparisons and employee communications. For larger or more complex organisations, Multidisciplinary consulting firms may be appropriate where the issue extends into payroll, accounting, tax implications, implementation and governance.  

So far so good – but are all these firms able to give financial advice regarding EOSB schemes? Spoiler alert: No they can’t.

The critical distinction: General HR advice vs Financial Advice

This is where employers should be extra careful.

Advice on reward structure, employee compensation & benefits, and implementation support is one thing. However, Financial advice is an entirely different matter. Why? In short, Financial Advice is a regulated activity.

For instance, if a company is considering buying insurance coverage, they will need to get advice from an insurance broker or an insurance company licensed and regulated by the Central Bank of the UAE (CBUAE).

Similarly, if companies (or individuals) consider taking advice on investment products, they need to obtain this from a CMA licensed financial adviser.

Who is the CMA? Remember – until the end of last year this regulator was known as the Securities and Commodities Authority (SCA), and since the beginning of this year it has morphed into the new Capital Markets Authority. (Please see our earlier article on the topic).

Why does this matter? Well – all End of Service Benefit (EOSB) Savings funds are regulated by the CMA, hence any financial advice regarding these can only be undertaken by CMA licensed advisers. Simple.

CMA licensing is essential for financial advice

Employers therefore should take great care who to get help from. In case the question is about “which fund manager should we choose?” – then the case is clear: Companies should only work with a CMA-licensed adviser. Many of which of course offer also other related consulting services, such as EOSB implementation support, employee communication, employee Compensation & Benefits design, financial modelling and more. Please contact Lux Actuaries Financial Consultants, a CMA-licensed financial adviser, to learn more.

Final word

The UAE’s new end-of-service savings framework is a significant development. It offers employers and employees a more modern and disciplined way to manage end-of-service obligations, but it also introduces new choices that many companies will be encountering for the first time.

The change to the new system poses a number of implementation challenges, last but not least which fund manager to choose.

Now is the right time for employers to review their EOSB approach, and think about how and when to switch to the new EOS system. These are questions and challenges which are new to the majority of UAE companies, many of which will conclude that it makes sense to appoint a professional adviser for these matters.

Please don’t hesitate to contact Lux Actuaries Financial Consultants, a CMA-licensed adviser, for an initial discussion.