CPF: Save more in CPF now if you want to invest in the new scheme in 2028

Save more in CPF now if you want to invest in the new scheme in 2028

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https://www.straitstimes.com/business/invest/save-more-in-cpf-now-if-you-want-to-invest-in-its-new-scheme-in-2028

2026-02-21

Tan Ooi Boon 

Invest Editor 

The Straits Times 

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Younger CPF members who are keen to invest in the new simplified and low-cost investment scheme that will be introduced in 2028 should start to save more in their Ordinary Account (OA) now.

Many of them do not have high balances in the first place because they either have not been working for very long or have used the bulk of their money in the OA to buy homes.

Currently, fewer than 30 per cent of members invest part of their savings in their OA or Special Account under the existing CPF Investment Scheme (CPFIS), which offers over 700 financial products.

The majority of members are not investing under the CPFIS because they either are not sure which products to put their money in or are contented with the risk-free 2.5 per cent and 4 per cent interest returns for their savings.

But in response to younger members who hope to earn more than the fixed interest returns but do not have the expertise or time to manage their investments, the CPF Board will work with suitable financial partners to introduce a new scheme for them.

To make it easier for them to decide, the board will work with only two or three private and reputable fund providers to offer a small number of options.

The move is welcomed because such government-led initiatives may dissuade some non-savvy investors from dabbling in high-risk and volatile investments, such as cryptocurrencies and complex funds that they may not even understand.

While all investments come with some risks, the CPF Board hopes to identify suitable funds that will automatically rebalance the product mix based on a member’s age, from higher-risk assets, such as public-listed stocks, when they are younger to lower-risk products, such as bonds, in later years.

To avoid being caught by a sudden downturn, the cashing-out process will be done in phases in the years leading to the investor’s target date, such as at age 65. The proceeds will go back to their CPF accounts.

To allow members to benefit more, investment fees will be capped at the lowest possible rates. More details will be made known when the scheme is ready.

Age is a consideration

Such products typically require time, such as up to 20 years, to ride out market volatility caused by global events to deliver better long-term returns.

Those aged between 20 and 45 are well placed to take advantage of the scheme so that they can cash out and use the hopefully higher returns to join national annuity scheme CPF LIFE at a higher sum to receive more monthly payouts after 65.

Older members can also invest, but they should consider their risk appetite and their time horizon because the premature cashing out of any long-term investment can result in poor returns or even losses.

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Time to grow CPF savings

As fixed deposit rates are hovering around 1 per cent, those who are keen in the new investment may want to start growing their savings in their OA in the coming two years.

For instance, those who are repaying home loans may want to use more cash to make the monthly repayments so that their savings in the OA can grow.

It makes sense to save more in the OA now and take advantage of its 2.5 per cent rate. By allocating more funds in the OA, you can have more leeway later to allocate your investment sums, as well as set aside a comfortable portion to repay your home loan.

For those who have finished repaying their home loans, it is a good time to start refunding money to your OA so that you can earn that 2.5 per cent interest pending using that extra cash for the investment scheme.

Of course, you can also top up your Special Account if your balance is below $220,400 and earn 4 per cent there too.

Ultimately, preparing to use more cash and not just your existing CPF balance to invest in the new scheme is a good diversification strategy because it ensures that your original CPF saving is still growing by itself even when you try new ways to make more money.

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