New CPF life-cycle investment scheme could channel S$6-S$9 billion a year into Singapore stocks: Citi

[SINGAPORE] The new Central Provident Fund (CPF) life-cycle investment scheme, set to launch in 2028, could unleash billions into the Singapore stock market, extending the liquidity boost provided by the Equity Market Development Programme (EQDP) into the long term.  

Announced at Budget 2026, the upcoming CPF scheme could provide “sufficient recurring liquidity inflow” into Singapore equities beyond the conclusion of the EQDP, whose funds are expected to be fully deployed by 2027, said Citi on Tuesday (Apr 21). 

Under the new scheme, CPF members can invest their CPF savings into a range of instruments including equities through diversified life-cycle portfolios – which offer potentially higher returns than those provided by the risk-free interest rates of the existing CPF system. 

Products offered under the scheme automatically rebalance investors’ portfolios towards lower risk assets as they age, moving from higher risk assets such as equities to lower-risk ones like bonds as the target date approaches. 

Citi highlighted the untapped potential offered by the new scheme. It noted that CPF generated around S$58 billion in annual contribution inflows in 2025. 

“Assuming 10 to 15 per cent of this amount is allocated into equities annually, the market could see an additional S$6 billion to S$9 billion in annual liquidity injection, thereby providing sustained demand (and) support for Singapore equities beyond EQDP’s potential end,” said the bank. 

Currently, around only 3 per cent of CPF’s S$661 billion cash funds are registered under the CPF Investment Scheme, which can be used for equities, said Citi. This proportion is the lowest among Asia-Pacific pension funds, which typically invest around 10 to 48 per cent of holdings into equities. 

“Longer-term, we see the revision of the CPF Investment Scheme to potentially drive added liquidity into the market with current direct equity exposure of Singapore pension fund money being among the lowest in Asia-Pacific to date,” the bank added. 

Citi’s preferred picks for investors include “less-crowded names with valuation and yield support” such as DBS, Genting Singapore, Sats, Seatrium and Yangzijiang Shipbuilding.

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‘Potential for superior returns’ 

While participating in the revised scheme is not without risk and is optional, Citi analysts noted that CPF members stand to reap “superior returns” by investing in the Singapore equities market. 

The bank noted that CPF members benefit from a 2.5 per cent guaranteed return on their Ordinary Account and a 4 per cent return from their Special Account, with returns funded by investments in Singapore government securities. 

By contrast, the Straits Times Index’s returns stand at a compound annual growth rate of around 9 per cent and 5 per cent over the last 10 and five years respectively, Citi said. 

Thus, “investing in the market could potentially offer better returns as compared to the interest income generated in keeping the CPF monies unallocated”, Citi said. 

The bank noted that some CPF account holders may have resisted investing in funds due to costly asset management fees and sales charges, alongside lack of familiarity with financial products. 

The upcoming revised CPF scheme, however, aims to address these qualms by introducing low-cost investment shares with capped rates, pre-packaged portfolio simplification and automatic rebalancing across asset allocation based on the contributor’s age.