Are CPF Members Becoming More Financially Savvy? 2026-07-10

Are CPF Members Becoming More Financially Savvy?

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https://www.zaobao.com.sg/forum/views/story20260710-9345627?utm_source=android-share&utm_medium=app

2026-07-10

Lianhe Zaobao

Author: Suzanne Quek (郭书真)

The author is a Senior Commentator and Deputy Business Editor at Lianhe Zaobao.

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AI Summary

The total amount invested by CPF members through their Ordinary Account (OA) has declined for three consecutive years, falling to S$16.6 billion in 2025, reflecting weaker investment appetite.

Treasury bill yields have fallen to 1.4%–1.6%, below the CPF Ordinary Account's guaranteed interest rate of 2.5%, prompting members to keep their funds in their CPF accounts instead.

In 2024, a record 499,000 members topped up their CPF accounts, with total top-ups reaching S$10.4 billion, partly due to the increase in the CPF LIFE Enhanced Retirement Sum (ERS) limit.

About 30% of members participating in the CPF Investment Scheme (CPFIS) achieved annualized returns below 2.5% or incurred losses, highlighting a trend toward "rational conservatism."

The CPF Board plans to introduce simplified lifecycle investment products in 2028 that will automatically adjust risk allocation based on retirement dates.

This summary was generated with AI assistance and is for reference only.

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The following is the original article:

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Are CPF Members Becoming More Financially Savvy?

Judging from the latest data on the CPF Investment Scheme, CPF members appear to be becoming increasingly conservative in their investment approach. Viewed from another perspective, however, it could also be said that they are becoming increasingly rational.

According to the latest 2025 data just released by the Central Provident Fund (CPF) Board, the total amount invested by CPF members through their Ordinary Accounts (OA) has declined year after year over the past three years, falling from S$25.4 billion in 2023 to S$23.2 billion in 2024, and then dropping significantly further to S$16.6 billion in 2025.

The reduced willingness to use CPF savings for investments may, on the one hand, be related to the interest rate environment. Six-month Treasury bill yields once approached 4% in 2023 and remained above 3% for most of 2024. For many members, using CPF savings to purchase these low-risk products was fairly attractive. However, as Treasury bill yields have fallen back to around 1.4% to 1.6%, leaving funds in CPF accounts has instead become the more attractive option. When the market's risk-free return falls below CPF's guaranteed interest rate, doing nothing is sometimes the more rational investment decision.

On the other hand, more people may be realizing that outperforming the Ordinary Account's guaranteed interest rate of 2.5% is not as easy as they had imagined, let alone the 4% offered by the Special Account (SA) and Retirement Account (RA). For example, between 2016 and 2024, about 490,000 members used their Ordinary Account savings to invest in various CPF Investment Scheme (CPFIS) products. Among them, about 30% achieved cumulative annualized returns below 2.5% or suffered losses.

Another set of data also suggests that CPF members are becoming increasingly financially prudent. Last year, 499,000 members made top-ups to their CPF accounts, far exceeding the 335,000 members in the previous year. The total amount of top-ups reached S$10.4 billion, an increase of 116%, setting a new historical record.

This is closely related to policy adjustments. Starting last year, the Enhanced Retirement Sum (ERS) limit under CPF LIFE was raised from three times the Basic Retirement Sum (BRS) to four times. As a result, many members chose to deposit more funds into their Retirement Accounts in order to earn higher interest and receive higher lifelong retirement payouts in the future.

Whether it is investing less or making more CPF top-ups, these changes may not necessarily be a bad thing. After all, CPF is fundamentally meant for retirement savings and should naturally be managed with caution. However, rationality is not every investor's choice. In reality, we continue to witness the opposite phenomenon—many people take excessive risks in pursuit of higher returns and even fall victim to investment scams.

In fact, whether one chooses caution or boldness, the underlying objective is the same: to make one's money work harder. The difference is that some people feel a stable 2.5% return is sufficient, while others consider 2.5% too low and seek returns of 8%, 10%, or even higher.

CPF has always been a system that people both love and hate. Some appreciate it because it allows them to earn stable interest, while others dislike it because, although the money belongs to them, they cannot use it freely as they wish. Such polarized feelings are often related to age and one's liquidity situation. For those who are already 55 years old, keeping money in CPF accounts is like having a savings account that offers a relatively high guaranteed interest rate, allowing them to continue earning interest while maintaining a certain degree of financial flexibility.

Although cash topped up into the Special Account or Retirement Account cannot be freely withdrawn afterward, for those who are not far from retirement age, the difference is actually not that significant. Rather than searching for investment opportunities, a simpler approach for this group is to transfer their Ordinary Account savings into their Special Account or Retirement Account.

Nevertheless, leaving money in CPF accounts may not be suitable for everyone, and it would not be advisable to blindly place all spare cash into CPF. Whether it is worthwhile depends on individual needs. If the spare cash is already intended for retirement, will not be needed for many years, and is not part of one's emergency funds, then depositing it into CPF is certainly an option worth considering.

Given the current interest rate environment, CPF's risk-free returns continue to offer a clear advantage. By comparison, the yields on fixed deposits and Treasury bills generally range between 1.0% and 1.6%, or even lower. Although the recent rise in the Singapore Overnight Rate Average (SORA) has prompted several banks to raise Singapore dollar fixed deposit rates, bank interest rates are unlikely to exceed CPF interest rates in the near term. While inflationary pressures have pushed major central banks toward a more hawkish stance, the damage caused by persistent inflation as well as the impact of U.S. tariff policies on the global economy may limit the pace of further interest rate hikes.

Of course, CPF is not the only option for growing retirement savings. Investors seeking both liquidity and stable returns may also consider relatively low-risk and highly liquid investment instruments, such as short-term bond funds, which are less affected by interest rate fluctuations and are expected to generate annualized returns of about 2.3% to 3.4%. As for investors willing to tolerate a modest degree of market volatility in pursuit of higher long-term returns, conservative robo-advisor portfolios are also worth considering. Such portfolios typically allocate 80% to 90% to high-quality bonds as the core holding, complemented by 10% to 20% in global equities, with the objective of achieving higher long-term returns while keeping risks under control.

Meanwhile, the CPF Board plans to further simplify the CPF Investment Scheme. It is expected to introduce low-cost, simplified lifecycle investment products in the first half of 2028. These products will automatically adjust asset allocation according to members' retirement dates, gradually reducing investment risk as retirement approaches. Whether the new scheme will deliver better returns remains to be seen, but it will at least provide members with another investment option.

Seeking higher returns is, after all, the purpose of investing. Choosing a conservative approach out of concern over losses is equally understandable. The real issue is not whether one is conservative or bold, but whether one can correctly assess risk while pursuing returns. The greatest investment risk is often not market volatility, but the mistaken belief that there truly exists an investment offering guaranteed profits, high returns, and low risk.

The author is a Senior Commentator at Lianhe Zaobao.