Singapore – The Central Provident Fund Board (CPF Board) plans to introduce a new investment scheme that will provide simplified, low-cost ‘lifecycle’ investment products to help CPF members grow their retirement savings.

Prime Minister Lawrence Wong announced the move in his budget speech on February 12.

“We will provide more investment options for CPF members who want to further increase their savings,” he said.

The CPF Board already has a CPF Investment Scheme, which gives members the option to invest their CPF savings in a wide range of products.

The new scheme will complement the existing system by providing simplified, lower cost and diversified lifecycle investment products with commercial product providers.

The CPF Board and the Ministry of Manpower (MOM) said in a joint statement on February 12 that this is in response to long-term investors who want to take on some risk for potentially higher returns, but who do not have much expertise in working with current products or who do not want to actively manage their investments.

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

In his budget speech, Prime Minister Wong said the CPF scheme provides stable, risk-free interest rates to help Singaporeans build their retirement nest egg.

CPF members can earn up to 6% annually on their CPF balance risk-free.

“Some CPF members, especially those with a longer path to retirement, are willing to take on more risks to potentially generate higher returns,” he said.

“But in my experience, most people aren’t very good at picking and trading individual stocks. It’s very difficult to consistently beat the market.”

He added that a smarter approach for retail investors is to offer broad and diversified exposure through low-cost funds.

“The risk remains,” he says. “Some people may invest when the market is high and retire during a recession, which is exactly when they need to save.”

Prime Minister Wong noted that the CPF Advisory Committee had previously recommended the introduction of a Lifetime Retirement Investment Plan, a life cycle approach with a pre-defined glide path. To retirement.

“In other words, members gain greater exposure to stocks and take on more risk when they are younger, and as they approach retirement their investments are automatically rebalanced to safer assets,” he said.

He added that the government is considering this recommendation, noting that such lifecycle investment products are available on the market but traditionally require high fees.

He said: “Rather than leave this entirely to the market, the government intends to support the formation and development of such products under the new regime for CPF members.”

He added that a key requirement is to keep fees low. Two to three trusted providers are also selected to make the choice easier for CPF members.

Participation in the new scheme is voluntary, so CPF members can choose whether to opt-in or not.

“At the same time, we will step up our efforts to help our members understand whether this option is right for them,” Wong said.

He added that the scheme could particularly help younger members who have a longer road to retirement and are better able to navigate short-term market fluctuations.

He also said the government was prepared in principle to provide some limited-time support to get the scheme off the ground.

The CPF Board and MOM said that lifecycle products are designed to automatically adjust the asset allocation of an investor’s portfolio along a glide path (a formula-based schedule that ensures reduced exposure to riskier assets over time) as the investor approaches a target date, such as retirement.

For example, if the target date is age 65, an investor’s portfolio may be phased out several years before that age.

“This adjusts the amount of investment risk that investors are exposed to at different stages of life and reduces the risk of market downturns upon exit,” the CPF Board and MOM said.

During a phased liquidation, investment income is transferred to the investor’s retirement account up to the full retirement amount.

The remaining earnings will be transferred to your savings account.

If a member decides to start making monthly payments at any time from age 65, they can join CPF Life using funds in their retirement account.

The CPF Board and MOM said market developments made the introduction of lifecycle investment products to CPF members timely.

“Advances in technology and the emergence of digital investment platforms may allow commercial providers to offer these products at more affordable prices,” they said.

Furthermore, these products also show the potential to achieve long-term benefits, adding that the adoption of such products has increased globally in recent years.

For example, government pension systems in countries such as the US and UK use life cycle investment products.

However, the CPF Board and MOM also warned that all investment products carry investment risks and returns are subject to market conditions.

Those who prefer a risk-free approach can continue to save in a CPF account and earn interest.

The CPF Board will engage with the industry from March, inviting potential providers to express their interest.

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