SINGAPORE: Central Provident Fund (CPF) members will have the option of putting their funds into a new CPF life-cycle investment scheme when it is introduced in 2028.
The new scheme was announced by Prime Minister Lawrence Wong in the Budget 2026 statement on Thursday (Feb 12).
According to the Ministry of Manpower (MOM) and CPF Board, the scheme will offer simplified, low-cost and diversified life-cycle investment products.
Life-cycle investments automatically rebalance investors' portfolios towards less risky assets as they approach a target date, such as retirement age.
"Today, the CPF system provides stable, risk-free interest rates to help Singaporeans grow their savings for retirement," said MOM and the CPF Board in a joint press release.
The existing CPF Investment Scheme (CPFIS) gives members the option of investing CPF savings in a wide range of instruments.
The new scheme will complement the existing system by catering to long-term investors who are willing to take some risk, but may have less expertise in navigating the CPFIS offerings or prefer not to actively manage their investments, they said.
It is meant for investors who want to stay invested for the long term, such as 20 years, and ride out market cycles.
In his Budget speech, Mr Wong noted that some CPF members are prepared to take more risk to generate potentially higher returns.
“But experience shows that most people do not do well picking and trading individual stocks,” he said.
“For retail investors, a more sensible approach is broad and diversified exposure through low-cost funds.”
Even then, risks remain as some may invest when markets are high and retire during a downturn, when they need their savings most, said Mr Wong, who is also the finance minister.
He said this was why the CPF Advisory Panel earlier recommended the Lifetime Retirement Investment Scheme, which was accepted by the government in 2016.
Mr Wong said the government had studied the panel’s recommendation carefully.
“Currently, such life-cycle investment products are available in the market, but they have traditionally come with high fees,” he said.
“Rather than leave this entirely to the market, the government will help shape and develop such products under a new scheme for CPF members.”
He added that the government will strengthen efforts to help Singaporeans understand whether this option is suitable for them, particularly younger members with a long runway to retirement who can better ride out short-term market fluctuations.
Participation in the new life-cycle investment scheme will be voluntary, like the CPFIS.
The CPF Board will work with two to three commercial product providers to offer curated options to simplify decision-making for investors.
“This is essentially a life-cycle investment approach, with a predefined glide path to retirement,” said Mr Wong.
“In other words, members take on more risk, with greater exposure to equities when they are younger, and their investments are automatically rebalanced towards safer assets as they approach retirement.”
The assets will be liquidated in phases by the target date. This is to calibrate the investment risk that CPF members are exposed to at different stages of life and mitigate the risk of exiting during a downturn.
For example, if the target date is when the investor turns 65 and becomes eligible for CPF payouts, the portfolio could be liquidated in phases a few years before then.
Upon liquidation, the investment sale proceeds will be transferred to the CPF member’s Retirement Account up to the full retirement sum. Any remaining proceeds will be transferred to the Ordinary Account.
The funds in the Retirement Account can then be used to join the CPF Life annuity scheme when the member decides to start receiving monthly payouts, and can help boost the payouts.
All-in fees for the scheme, including total expense ratio fees, wrap fees and distribution costs, will be capped to keep costs low for investors.
From March, the CPF Board will engage the industry on the product specifications and invite expressions of interest. It will work with independent investment consultants to evaluate applications.
Selected providers are expected to be announced in the first half of 2027, and this will be followed by the scheme's launch in the first half of 2028.
Last month, Manpower Minister Tan See Leng said the ministry was in the final stages of studying how to further support CPF members' retirement planning with products that would "strike the right balance between risk and return".
MOM and the CPF Board said on Thursday that market developments have made it timely to introduce life-cycle investment products to CPF members.
"Technological advancements and the advent of digital investment platforms may enable commercial providers to offer these products at more affordable costs," they said.
"Based on market studies, life-cycle investment products show potential to achieve good returns over a long-term horizon, with increasing adoption of such products internationally in recent years."
MOM and the CPF Board reiterated that all investment products carry investment risk, and that returns are subject to market conditions.
They also added that while products under the new scheme will be provided and managed by commercial product providers, the government is prepared to provide "some time-limited support to kick-start the new scheme".
Mr Wong also announced further steps to strengthen retirement support for Singaporeans.
There will be a CPF top-up of up to S$1,500 (US$1,200) for Singaporeans aged 50 and above who have CPF retirement savings below the basic retirement sum. Those with lower balances will receive larger top-ups.
Mr Wong also said that the government will proceed in 2027 with the next increase in CPF contribution rates for workers aged above 55 to 65.
The government previously announced in 2019 that CPF contribution rates would be raised gradually for workers aged above 55 to 70. The target rate has already been reached for workers aged above 65 to 70.
Workers who are above 55 to 60 currently have a CPF contribution rate of 34 per cent. This will rise to 35.5 per cent in 2027.
To do this, the employer’s contribution rate will increase by 0.5 percentage points to 16.5 per cent, and the employee’s contribution rate will increase by 1 percentage point to 19 per cent.
The target for this age group is to reach a CPF contribution rate of 37 per cent by around 2030.
Workers who are above 60 to 65 currently have a CPF contribution rate of 25 per cent. This will rise to 26 per cent in 2027, reaching the target for this age group.
This will be done by increasing both the employer’s and employee's contribution rates by 0.5 percentage points to 13 per cent.
Employers will get a one-year CPF Transition Offset to mitigate the rise in business costs. This will be equivalent to half of the 2027 increase in employer contribution rates for every Singaporean and permanent resident employee aged above 55 to 65.
Mr Wong also announced a S$400 million top-up to the Long-Term Care Support Fund for additional subsidies to cushion the impact of higher premiums under Careshield Life.
The national disability insurance scheme is providing higher payouts from 2026.
Continue reading...
The new scheme was announced by Prime Minister Lawrence Wong in the Budget 2026 statement on Thursday (Feb 12).
According to the Ministry of Manpower (MOM) and CPF Board, the scheme will offer simplified, low-cost and diversified life-cycle investment products.
Life-cycle investments automatically rebalance investors' portfolios towards less risky assets as they approach a target date, such as retirement age.
"Today, the CPF system provides stable, risk-free interest rates to help Singaporeans grow their savings for retirement," said MOM and the CPF Board in a joint press release.
The existing CPF Investment Scheme (CPFIS) gives members the option of investing CPF savings in a wide range of instruments.
The new scheme will complement the existing system by catering to long-term investors who are willing to take some risk, but may have less expertise in navigating the CPFIS offerings or prefer not to actively manage their investments, they said.
It is meant for investors who want to stay invested for the long term, such as 20 years, and ride out market cycles.
In his Budget speech, Mr Wong noted that some CPF members are prepared to take more risk to generate potentially higher returns.
“But experience shows that most people do not do well picking and trading individual stocks,” he said.
“For retail investors, a more sensible approach is broad and diversified exposure through low-cost funds.”
Even then, risks remain as some may invest when markets are high and retire during a downturn, when they need their savings most, said Mr Wong, who is also the finance minister.
He said this was why the CPF Advisory Panel earlier recommended the Lifetime Retirement Investment Scheme, which was accepted by the government in 2016.
Mr Wong said the government had studied the panel’s recommendation carefully.
“Currently, such life-cycle investment products are available in the market, but they have traditionally come with high fees,” he said.
“Rather than leave this entirely to the market, the government will help shape and develop such products under a new scheme for CPF members.”
He added that the government will strengthen efforts to help Singaporeans understand whether this option is suitable for them, particularly younger members with a long runway to retirement who can better ride out short-term market fluctuations.
HOW THE SCHEME WORKS
Participation in the new life-cycle investment scheme will be voluntary, like the CPFIS.
The CPF Board will work with two to three commercial product providers to offer curated options to simplify decision-making for investors.
“This is essentially a life-cycle investment approach, with a predefined glide path to retirement,” said Mr Wong.
“In other words, members take on more risk, with greater exposure to equities when they are younger, and their investments are automatically rebalanced towards safer assets as they approach retirement.”
The assets will be liquidated in phases by the target date. This is to calibrate the investment risk that CPF members are exposed to at different stages of life and mitigate the risk of exiting during a downturn.
For example, if the target date is when the investor turns 65 and becomes eligible for CPF payouts, the portfolio could be liquidated in phases a few years before then.
Upon liquidation, the investment sale proceeds will be transferred to the CPF member’s Retirement Account up to the full retirement sum. Any remaining proceeds will be transferred to the Ordinary Account.
The funds in the Retirement Account can then be used to join the CPF Life annuity scheme when the member decides to start receiving monthly payouts, and can help boost the payouts.
All-in fees for the scheme, including total expense ratio fees, wrap fees and distribution costs, will be capped to keep costs low for investors.
From March, the CPF Board will engage the industry on the product specifications and invite expressions of interest. It will work with independent investment consultants to evaluate applications.
Selected providers are expected to be announced in the first half of 2027, and this will be followed by the scheme's launch in the first half of 2028.
WHY NOW?
Last month, Manpower Minister Tan See Leng said the ministry was in the final stages of studying how to further support CPF members' retirement planning with products that would "strike the right balance between risk and return".
MOM and the CPF Board said on Thursday that market developments have made it timely to introduce life-cycle investment products to CPF members.
"Technological advancements and the advent of digital investment platforms may enable commercial providers to offer these products at more affordable costs," they said.
"Based on market studies, life-cycle investment products show potential to achieve good returns over a long-term horizon, with increasing adoption of such products internationally in recent years."
MOM and the CPF Board reiterated that all investment products carry investment risk, and that returns are subject to market conditions.
They also added that while products under the new scheme will be provided and managed by commercial product providers, the government is prepared to provide "some time-limited support to kick-start the new scheme".
STRONGER RETIREMENT SUPPORT
Mr Wong also announced further steps to strengthen retirement support for Singaporeans.
There will be a CPF top-up of up to S$1,500 (US$1,200) for Singaporeans aged 50 and above who have CPF retirement savings below the basic retirement sum. Those with lower balances will receive larger top-ups.
Mr Wong also said that the government will proceed in 2027 with the next increase in CPF contribution rates for workers aged above 55 to 65.
The government previously announced in 2019 that CPF contribution rates would be raised gradually for workers aged above 55 to 70. The target rate has already been reached for workers aged above 65 to 70.
Workers who are above 55 to 60 currently have a CPF contribution rate of 34 per cent. This will rise to 35.5 per cent in 2027.
To do this, the employer’s contribution rate will increase by 0.5 percentage points to 16.5 per cent, and the employee’s contribution rate will increase by 1 percentage point to 19 per cent.
The target for this age group is to reach a CPF contribution rate of 37 per cent by around 2030.
Workers who are above 60 to 65 currently have a CPF contribution rate of 25 per cent. This will rise to 26 per cent in 2027, reaching the target for this age group.
This will be done by increasing both the employer’s and employee's contribution rates by 0.5 percentage points to 13 per cent.
Employers will get a one-year CPF Transition Offset to mitigate the rise in business costs. This will be equivalent to half of the 2027 increase in employer contribution rates for every Singaporean and permanent resident employee aged above 55 to 65.
Mr Wong also announced a S$400 million top-up to the Long-Term Care Support Fund for additional subsidies to cushion the impact of higher premiums under Careshield Life.
The national disability insurance scheme is providing higher payouts from 2026.
Continue reading...