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CPF Investment Scheme (CPFIS): Should you invest your CPF savings?

CPF Investment Scheme
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Are you worried that your nest egg isn’t enough? Think that investing is the answer, but have nowhere from which to pull funds? Well, have you considered investing your CPF savings?

This might not be the first question on anyone’s mind because not many people are actually aware that using their savings is an option to use when investing.  

It’s a common misconception that CPF savings are locked tight like a time capsule only to be opened and used on your retirement, but surprise, surprise, that’s not entirely true. There is some difficulty, and there may be a catch or two here and there, but under the CPFIS, people are allowed to invest using CPF accounts.

So if you’re planning to have more investment products in your portfolio, wanting to secure cosier retirement, or looking to make extra funds with CPF monies, read on to learn more about the CPF Investment Scheme and how to get started.

What Is a CPF Investment Scheme (CPFIS)?

First off, what is a CPF Investment Scheme (CPFIS)? Before we get to that, let’s first talk about CPF, Singapore’s take on social security.

What is CPF?

The Central Provident Fund (CPF) is Singapore’s mandatory social security savings scheme that is funded by Singaporeans and their employers. It is a centralized, all-purpose system that serves as the foundation of Singapore’s social security, covering home loans, medical, local college education, and retirement needs.

But that’s not all. In addition to all the birds that this single stone can hit, you can use your CPF account funds as investible savings. This is what is known as the CPF Investment Scheme.

Under CPFIS, Singaporeans can invest their CPF savings in various instruments such as insurance products, unit trusts, fixed deposits, bonds, and shares. In a nutshell, it lets you use a part of your CPF Ordinary Account (CPF-OA) and/or Special Account (CPF-SA) as an investment account for different uses.

What’s the point of using CPFIS?

Aside from having an added source of money for investment use, the CPF Investment Scheme (CPFIS) is to get accessible money from your CPF accounts.

Take a look at the interest rates for each account type as provided by the CPF board:

Account Type Interest Per Annum Bonus Interest
Ordinary Account 2.5% +1% on first $60,000 (capped at $20,000 for OA)

 +1% on first $30,000 for 55 years old and up (capped at $20,000 for OA)

Special Account 4%
Medisave Account 4%
Retirement Account 4%

Special Account (SA) 4% Medisave Account 4% Retirement Account 4%

Having money in a CPF account indeed yields you a passive increase thanks to interest, and compared to leaving it in the bank, it’s also risk-free.

The problem is the interest rate usually is not high enough to combat inflation.

An option is to transfer your OA funds to your CPF-SA for its better interest rate,  and while you can see better growth, your CPF monies are going to be locked until retirement in a Special Account. You can’t transfer them back to your Ordinary Account for housing and college.

This is where CPFIS comes in. It provides you with an opportunity to grow your CPF monies by investing with CPFIS-OA and CPFIS OA, earning more than the 4% interest rate.

Take note, however, that using your CPF savings to invest removes its risk-free state, making it a possibility for your money to stay well below the 2.5 p.a. interest rate. If you aren’t one to take risks, it might not be best to invest your CPF money, but the opportunity is there if you think there is something to gain from using your CPF to make it grow.

What Are the Eligibility Criteria for CPFIS?

To start investing under CPFIS, you must: 

  • Be at least 18 years old;
  • Not be an undischarged bankrupt;
  • Have more than $20,000 in your CPF Ordinary Account (OA)
  • Have more than $40,000 in your CPF Special Account  (SA)

You may be wondering why you need to have a minimum amount before using an account for investments. The answer is simple: investments are a fickle thing, and having the required sums ensures that you have a money safety net if your investments don’t pan out, like when there’s a market downturn or a recession.

Finally, you have to take the CPFIS Self-Awareness Questionnaire (SAQ). This is a quick quiz to see if your investment knowledge is up to par, as using CPF savings to invest comes with some risks. Learning modules are also provided before the quiz.

So if you’re 18-years old and above with sufficient money in your Central Provident Fund account, why not open a CPFIS-OA or CPFIS-SA?

Things You Need to Know Before You Open a CPF Investment Account

  • CPFIS: Investments for the Future

Don’t forget that your  CPFIS returns will go directly toward your CPF accounts, meaning CPFIS returns go to the respective account used.

Of course, this means that your investments are for future use and not for present expenditures.

This presents the caveat that you might not want to risk your money buying stocks and shares that you won’t be able to use until you’re looking to purchase a house or until you retire.

If your goal is to make your nest egg more comfortable, you may want to invest using your savings rather than rely on interest rates.

  • How much can you invest?

CPFIS-SA doesn’t require many calculations. You can invest any amount outside of the minimum $40,000 balance in your account.

Some products are similar when you invest using CPF-OA in that any amount is fine beyond the $20,000 minimum. However, in the case of some investment products, you can only use a percentage of your investible savings.

Investible savings is the amount that is based on your CPF-OA balance added to the amount you’ve withdrawn for housing and education.

You can only use up to 35% of your investible savings for investing in shares or stocks, while and 10% of your investible savings in gold or gold-related investments.

  • What are the potential returns in a CPFIS?

Unfortunately, there is no absolute answer to this question as it will largely depend on the product you are investing in, whether it’s shares, bonds, or trusts.

One thing to note is that higher returns might expose you to more risks, but considering you want to earn more than CPF interest rates per annum, it’s possible to invest in something safer while expecting more growth rather than leaving the money stagnate in your account.

Ensure that you do not just account for 2.5% or 4% as the number to beat and include any charges you may incur as you use CPFIS.

What Types of Investments Can You Purchase Under CPFIS?

Another catch with CPFIS is you can only purchase investment products that the Central Provident Fund itself allows. This means you can’t pull out money to invest in the latest get-rich-quick scheme. This is likely for the best, as you don’t want to be gambling with your social security.

Aside from the shortlist, investment products are also limited by which savings account you will use.

Using your Special Account means you are disallowed to use it for high-risk investments and limit you to safe choices like Singapore government bonds.

Using CPF-OA is less strict, and risk assessment is based on your discretion, so fund management accounts and shares are available.

Some investment products are available for both, like unit trusts, investment-linked insurance, and exchange-traded funds, but CPFIS-SA is limited to lower-risk products.

The Investment Management Association of Singapore has a more in-depth report on product risk profiles.

Here is a table featuring the products you can invest in and whether you can use your CPF-OA or your CPF-SA

Investment Product Eligible for CPFIS-OA? Eligible for CPFIS-SA? Notes
Unit Trusts Yes Some CPFIS-SA only allows those with a low-risk profile.
Investment-linked insurance products (ILPs) Yes Some CPFIS-SA only allows those with a low-risk profile.
Annuities Yes Yes
Endowment Policies Yes Yes
Singapore Government Bonds (SGBs) Yes Yes
Treasure Bills (T-bills) Yes Yes
Exchanged-Traded Funds (ETFs) Yes No
Fund Management Accounts Yes No
Fixed Deposits (FDs) No products at the moment
Statutory Board Bonds No products at the moment
Bonds Guaranteed by Singapore Government No products at the moment
Shares Up to 35% of investible savings No Share, fund, or bond must be listed here.

 The product must also be offered by a company incorporated in Singapore, denominated in Singapore dollar, and listed on the Singapore Exchange (SGX) Main Board.

The list of criteria for each is listed here.

Property Fund Up to 35% of investible savings No
Corporate Bonds Up to 35% of their investible savings No
Gold ETFs Up to 10% of their investible savings No Only SPDR Gold Shares included.
Other Gold Products (Gold certificates, Gold savings accounts, Physical Gold) Up to 10% of their investible savings No Your investment account must be opened with UOB. They will provide the list of available products.

For a full list of investment products screened by CPF, click

How to Start Investing With CPFIS

With eligibility and risk-awareness out of the way, you can begin to use CPFIS.

For CPFIS-SA, there is no need to open a CPF investment account. You can approach the investment product providers directly.

On the other hand, investing with CPFIS-OA has some steps you have to follow.

Armed with the necessary documents and your CPF statements, these are the steps you have to take:

How to open a CPF investment account using CPF-OA

First: Open an account with DBS, OCBC, or UOB

Pick your preferred local bank. This is purely for administering your funds, so there really isn’t a special reason to choose one unless one of them is your favorite. Also, note that whether you choose DBS, OCBC, or UOB, the same fees will apply.

Second: Open an investment brokerage account.

The next step in opening a CPF investment account is to open an investment brokerage account with a CPFIS-eligible investment brokerage.

Your chosen firm doesn’t have to be the same as the bank where you opened your investment account. If you open an account with DBS, it’s perfectly fine to invest with OCBC securities.

Be sure to keep track of their management fees.

A full list of these brokerage firms can be found here.

Alternative Second Step: Hire a broker.

If you aren’t so confident in your investment skills or you simply don’t have the time, you can opt to have a financial professional handle your CPFIS for you. All you need is to choose where to invest, sign the paperwork, and pay additional handling fees.

The Bottom Line

CPFIS is an excellent option for investing as it opens up the possibility of increasing your CPF funds. The risks may not be helping build a case, but the government itself has taken measures to ensure that your savings are safe from mismanaging, even from your own hands. Remember, the money in your CPF account is for your future.

Don’t take risks you are not entirely comfortable with, so don’t forget to do your due diligence when choosing an investment product. We recommend that you start with CPFIS-OA as 2.5% interest is easier to beat, and your returns will find more immediate use.

Need to make a purchase or investment that ISN’T covered by CPF?  A loan is your answer! Check out Loan Advisor for guidance on loan options in Singapore.

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