Budget 2026: New CPF life-cycle investment scheme likely to appoint only two to three fund managers to keep fees low
Simplicity and cost are two important aspects of the voluntary scheme, says MOM
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[SINGAPORE] The Central Provident Fund (CPF) Board’s new life-cycle investment scheme, scheduled to launch in the first half of 2028, will likely appoint two to three “reputable commercial providers”, offering members a small number of options to keep choices simple, said Manpower Minister Tan See Leng.
Speaking during his ministry’s Committee of Supply debate on Tuesday (Mar 3), Dr Tan added that applications would be rigorously evaluated by independent investment consultants appointed by the CPF Board, with criteria including investment capability and track record.
While he did not disclose the expected costs, he said the government would “cap all-in fees to keep costs low” and is prepared to provide time-limited support to interested members.
Explaining why the number of providers would be deliberately kept small, the Ministry of Manpower (MOM) said at a media briefing ahead of Tuesday’s debate that expanding the pool too widely would “split the market so small that (the providers) would not have the scale to bring the fees down”.
MOM added that simplicity and cost are two “very important parts” of the scheme, and that members should not be burdened with onerous choices if too many fund managers are appointed.
The ministry emphasised that its role is to structure and oversee the scheme, while leaving portfolio management to the appointed fund managers.
An industry briefing will be held in March, after which MOM will call for an expression of interest. Selected providers are expected to be announced in the first half of 2027, with the scheme slated for roll-out the following year.
The currently unnamed scheme was first announced by Prime Minister and Finance Minister Lawrence Wong during his Budget speech on Feb 12.
The scheme works by adopting a glide-path mechanism to automatically rebalance members’ asset allocation from higher-risk assets, such as equities, towards lower-risk assets, such as bonds, as they approach their target retirement age.
The portfolio will be liquidated in phases by the target date, to mitigate the risk of a sharp downturn at the point of exit.
In response to a supplementary question from MP for Bishan-Toa Payoh GRC Saktiandi Supaat on whether members could select later retirement horizons as working lives lengthen, Dr Tan said the scheme is designed with a long-term runway for younger members and will feature automatic rebalancing over time.
While details such as the liquidation time horizon will depend on discussions with providers, he noted that many CPF members already defer payouts to age 70, and some have asked for this to be extended further.
“We are all living longer... and these are the considerations we will constantly... review,” he said.
In his speech, Dr Tan acknowledged that for many Singaporeans – particularly older workers and those who prioritise certainty – the risk-free returns offered by CPF remain highly attractive.
“Not everyone has the appetite for investment risk,” he said. “Hence, this new scheme will be voluntary.”
As for members who prefer to manage their own investments, he said they can continue to invest their Ordinary and Special Account balances under the CPF Investment Scheme. They may also choose to retain their savings in their CPF accounts to earn risk-free returns, he added.
Dr Tan also said that he agrees with suggestions from parliamentarians to improve investor literacy.
“(CPF) members must understand the products and their risks, and decide the most suitable option for themselves,” he said, adding that his ministry would work with selected product providers and partners, including the Monetary Authority of Singapore to enhance investor education.
Preparing better for retirement
Separately, Dr Tan said that MOM will be announcing later this year the new retirement sums for cohorts beyond 2027, to allow CPF members to plan ahead.
While he did not provide details, he said: “With rising living standards, the new sums will better reflect the savings needed to meet basic retirement needs in the future.”
Dr Tan also recapped a range of other CPF-related support measures for senior workers that were first announced by PM Wong on Feb 12.
From Jan 1 next year, CPF contribution rates will be up 1.5 percentage points for workers aged above 55 to 60, and one percentage point for those aged above 60 to 65.
To mitigate the rise in business costs due to this increase, the government will provide employers with an automatic one-year CPF transition offset.
This will be equivalent to half of the 2027 increase in employer CPF contribution rates for every Singaporean and permanent resident worker they employ aged above 55 to 65.
Singaporeans aged 50 and above, and with CPF retirement savings below the Basic Retirement Sum will also receive up to S$1,500 in top-ups to their CPF accounts if they live in a residence with an annual value that does not exceed S$31,000 as at Dec 31, 2025.
The top-ups will be credited in December 2026 into the individual’s CPF Retirement Account. If it has not been created, the top-up will be credited into the Special Account.
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