Budget 2026: CPF Board to introduce new investment scheme in 2028

SINGAPORE – The Central Provident Fund (CPF) Board will introduce a new investment scheme to offer simplified, low-cost “life cycle” investment products to help CPF members grow their savings for retirement.

Prime Minister Lawrence Wong announced this move in

his Budget speech on Feb 12

.

He said: “We will offer more investment options for CPF members who wish to grow their savings further.”

The CPF Board already has a CPF Investment Scheme, which provides the option for members to invest CPF savings in a wide range of instruments.

The new scheme will complement the existing system, by offering simplified, low-cost and diversified life-cycle investment products from commercial product providers.

It will cater to long-term investors who want to take some risk for potentially higher returns, but who may have less expertise in navigating the current offerings or prefer not to actively manage their investments, the CPF Board and Ministry of Manpower (MOM) said in a joint statement on Feb 12.

The new scheme is expected to be launched in the first half of 2028.

PM Wong noted in the Budget speech that the CPF system provides stable, risk-free interest rates to help Singaporeans build their retirement nest egg.

CPF members can earn up to 6 per cent per annum, risk-free, on their CPF balances.

“Some CPF members, especially those with a longer runway to retirement, are prepared to take more risk to generate potentially higher returns,” he said.

“But experience shows that most people do not do well picking and trading individual stocks. It is very hard to beat the market consistently.”

He added that for retail investors, a more sensible approach is broad and diversified exposure through low-cost funds.

“Even then, risks remain,” he said. “Some may invest when markets are high and retire during a downturn – precisely when they need their savings.”

PM Wong noted that the CPF Advisory Panel had earlier recommended introducing a Lifetime Retirement Investment Scheme, which is a life-cycle approach with a predefined glide path to retirement.

“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,” he said.

He added that the Government has studied the recommendation, and noted that such life-cycle investment products are available in the market but have traditionally come with high fees.

“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 said.

He added that a key requirement will be that fees are kept low. Two to three credible providers will also be selected to keep choices simple for CPF members.

Participation in the new scheme will be voluntary, so CPF members can choose whether to opt in.

“At the same time, we will strengthen efforts to help members understand whether this option is suitable for them,” PM Wong said.

He added that this scheme in particular can help younger members, who have a longer runway to retirement and can better ride out short-term market fluctuations.

The Government will also be prepared, in principle, to provide some time-limited support to kick-start the scheme, he said.

The CPF Board and MOM said that life-cycle products are designed to automatically adjust an investor’s portfolio asset allocation along a glide path – a formula-based schedule that steadily reduces exposure to riskier assets over time – as the investor’s age approaches a target date, such as retirement.

For instance, if the target date is the age of 65, the investor’s portfolio could be liquidated in phases a few years before that age.

“This calibrates the amount of investment risk which investors are exposed to at different stages of life and mitigates the risk of a market downturn during exit,” the CPF Board and MOM said.

Upon phased liquidation, the investment proceeds will be transferred to the investor’s Retirement Account, up to the full retirement sum.

Any remaining proceeds will then be transferred to the Ordinary Account.

The funds in the Retirement Account can be used to join CPF Life when the member decides to start monthly payouts any time from age 65.

The CPF Board and MOM said 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.

They added that these products also show potential to achieve returns over a long-term horizon and that there has been an increasing adoption of such products globally in recent years.

For instance, life-cycle investment products are used in the government pension schemes of countries such as America and Britain.

But the CPF Board and MOM also cautioned that all investment products carry investment risk and that returns are subject to market conditions.

Those who prefer a risk-free approach can continue to keep their savings in CPF accounts to earn interest.

The CPF Board will engage the industry from March and invite potential providers to express their interest.

Selected providers are expected to be announced in the first half of 2027.

Read next: 11 highlights from PM Wong’s speech