Longer wait: A pedestrian walks along the deserted Boat Quay in Singapore. The government is studying how it can provide further support to CPF members to plan for their retirement. — Bloomberg
SINGAPORE: Central Provident Fund (CPF) members who want to invest their savings in a retirement investment scheme, first announced and accepted by the government in 2016, will have to wait a little longer to do so.
The Manpower Ministry is in the “final stages” of studying its response to the CPF Lifetime Retirement Investment Scheme (LRIS) and will give updates when it is ready.
The previously proposed LRIS is billed as a simple and low-cost investment alternative to the CPF Investment Scheme (CPFIS) products.
It would be applicable for CPF members who want to invest but feel they lack the financial expertise and/or time and resources to actively manage their investments.
Manpower Minister Tan See Leng was responding in Parliament to a question from Shawn Loh (Jalan Besar GRC), who asked if the delay in implementing the LRIS may deprive CPF members of an option to take risks to earn higher expected returns.
Loh pointed out that a typical investment portfolio with 65% invested in equities and 35% in bonds had earned 9.5% returns every year over the past five years.
Tan said the government is studying how it can provide further support to CPF members to plan for their retirement.
The retirement investment option that will eventually be introduced should “strike the right balance between risk and return”, he added.
Tan said CPF members can already invest their savings through a number of low-cost funds under the CPFIS for potentially higher returns.
According to investment research firm Morningstar, the investment consultant for the CPFIS, all CPFIS funds – unit trusts and investment-linked insurance products – had an average one-year return of 11.78% in Singapore dollar terms for the third quarter ended September 2025.
Cumulative returns reached 37.03% over three years, equivalent to a return of 10.74% a year.
Acknowledging Loh’s comment that time in the market is more important than timing the market, Tan said he fully agreed with him.
However, he added that much also depends on how much time each investor has in the market.
For instance, if a product was launched recently and an investor had to liquidate his investments during a downturn for his retirement needs, he would have experienced a drop in the investment value.
The investor would not have been able to benefit from enough time in the market to ride out the market falls, ultimately impacting his retirement adequacy, Tan said.
He added that the objective has always been to safeguard retirement adequacy.
When pressed by Louis Chua (Sengkang GRC) on whether there will be an update in 2026, Tan would not be drawn into giving a specific timeframe.
“We are close to finalising the details,” he said, noting that the CPF Board is reviewing the recommendations made by the CPF advisory panel in 2016.
Tan added that time has passed and markets have evolved since then, necessitating a deeper look into which suggestions can be incorporated into the retirement investment option.
Associate Professor Jamus Lim (Sengkang GRC) wanted to find out more and asked if there will be one that is fully geared towards Singapore equities.
Tan said the construct of the retirement investment option would take into account different weightages of global equities and bonds.
He added that it will be a glide path, an investment strategy where an investor takes more risks by holding more equities versus bonds when young.
Then, as retirement nears, that investor will take less risk by holding more bonds.
The investor is essentially gliding towards retirement with the aim of preserving/protecting his CPF savings as he gets older.
Apart from investing their CPF savings, members can choose to leave their money in the Ordinary Account (OA) and Special Account (SA) to earn the risk-free rate of return.
A CPF member who is below 55 would earn 2.5% on his OA savings and 4% on his SA savings, with an extra 1% on the first S$60,000 of combined balances.
The extra interest is capped at S$20,000 for the OA.
CPF members who are 55 and above would earn 2.5% on the OA and 4% on the Retirement Account, with an extra 2% on the first S$30,000 of combined balances and an additional 1% on the next S$30,000 of combined balances.
The extra interest is capped at S$20,000 for the OA. — The Straits Times/ANN
