Budget 2026: 3 things CPF members should know about the new investment scheme

The CPF board will work with commercial product providers to offer new simplified, low-cost and diversified “life-cycle” investment products that aim to allow members who are willing to take some risk to earn higher returns than its existing interest rates.

The voluntary scheme

, which complements the existing Central Provident Fund Investment Scheme (CPFIS) that already offers over 700 private products, is expected to be rolled out in the first half of 2028. Here are three important points that you should know:

1. Who is it for?

The new scheme aims to cater to younger members who hope to earn returns that are higher than the guaranteed 2.5 per cent and 4 per cent interest of the CPF Ordinary and Special accounts, respectively, but do not yet have the expertise nor time to manage their investments.

Age is a big consideration because such products typically require time, such as up to 20 years, to ride out market volatility caused by global events to deliver better long-term returns.

Those aged between 20 and 45 are well-placed to take advantage of the scheme so that they can cash out and use the hopefully higher returns to join the CPF LIFE national annuity at a higher sum to receive more monthly payouts after 65.

Older members can also invest in such products. But before they put in their money, it is prudent to consider their risk appetite as well as the time horizon because the premature cashing out of any long-term investment can result in poor returns or even losses.

2. What are you investing in?

To make it easier for non-investment savvy members to decide, the CPF Board will work with only two or three private and reputable fund providers to offer a small number of options.

A key feature is that these funds will automatically rebalance the product mix based on the member’s age, from higher-risk assets – such as public-listed stocks – when they are younger to lower-risk products such as bonds in later years.

To avoid being caught by a sudden downturn, the cashing out process will not be done all at once but in phases in the years leading to the investor’s target date, such as at age 65.

The proceeds will go back to the member’s CPF account.

To allow members to benefit more, CPF Board will ensure that the investment fees will be capped at the lowest possible rates, when compared with existing commercial products.

Once the scheme is confirmed, selected vendors are likely to share the projected long-term yields of their products as well as the process of investment, such as in lump sums or smaller regular contributions.

3. What to consider before investing

Like with the CPFIS, members need to keep a minimum balance of $20,000 in the Ordinary Account (OA) and $40,000 in the Special Account before they use any funds for investment. If they have other long-term commitments, such as paying a monthly home mortgage, it is prudent to keep a higher balance in their OA so that they will not be caught with any cash flow problems.

Ultimately, investing is a personal choice that depends on members’ risk appetite and their ability to stay in the game for the long haul to ride out any market downturns.

If they prefer a risk-free way to earn more, they can just make sure that their CPF accounts continue to grow from the employer’s monthly contributions or voluntary self top-ups to earn the guaranteed and decent interest rates.

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