How Endowus improved CPF investing in Singapore
Endowus Insights

How Endowus improved CPF investing in Singapore

June 23, 2022
April 19, 2022

It is a topic close to the hearts of many Singaporeans: am I ready for retirement? 

Singaporeans’ retirement adequacy is often tied to Singapore’s pension scheme, with these savings administered here by the Central Provident Board (CPF).

But in 2020, just over 60% of active CPF members had set aside the baseline Retirement Account amount, known as the Full Retirement Sum. That also means that about 4 in 10 Singaporeans are not fully prepared for retirement by this measure. 

Our CPF savings should be worked harder for our retirement needs. Endowus is the first CPF digital advisor in Singapore, and we have been committed to improving the CPF investing journey from day one. 

Why managing CPF savings is critical for retirement

From the time Singaporeans start out in their career, to the time they retire, a portion of their monthly salary will be automatically transferred to their CPF account. Employers here will also contribute a percentage of the monthly salary into their employees’ CPF account.

CPF contribution breakdown

For those who are 55 and below, 20% is set aside from their monthly salary. Another 17% is topped up by their employer. The CPF scheme guarantees an interest rate that begins at 2.5%, which is attractive relative to savings account or fixed deposit rates. 

These monthly CPF contributions build up to a sizable amount over time. A $1,000 monthly contribution into CPF OA builds up to $240,000 in 20 years. Compounded at 2.5% p.a, this sum grows to a sizable $310,000. 

That said, can you work your CPF Ordinary Account (OA) money harder for your retirement? Here are the statistics — by taking on some risk, that $240,000 can be invested and grow to more than $500,000 after two decades.

CPF/CPFIS balance, after invested/holding in different vehicles

CPF contribution rate changes from 1 Jan 2022

For monthly wages above $750

Employee's age
(% of wage)
By employer
(% of wage)
By employee
(% of wage)
55 and below 37 17 20
55 to 60 28 14 14
60 to 65 18.5 10 8.5
65 to 70 14 8 6
Above 70 12.5 7.5 5

Source: CPF

Some of us depend on our CPF OA savings to pay for our mortgage. With property prices at record levels, our CPF funds are often used to meet our immediate housing needs. 

That’s all the more reason to have our remaining CPF balances work harder for retirement. This can either be achieved through making a CPF OA to Special Account (SA) transfer to take advantage of SA’s higher interest, or through CPF OA investments.  

Learn more: Plan for your retirement with the Endowus CPF calculator

Trailblazer with CPF investing

As a pioneer in this digital advisory space for CPF investments, Endowus has been in the forefront of making the CPF Investment Scheme (CPFIS) a better experience for all CPF members. The aim is to give CPF members a stronger chance of success at growing their pool of money for their retirement needs. 

We take in funds from CPF, SRS, and your cash accounts, giving you a seamless one-stop platform to channel funds from your main funding avenues to investment solutions — be they in advised portfolios, or in more than nearly 250 single funds available on our platform. 

CPF members can easily instruct an automatic monthly contribution to their CPF investment portfolio or single fund (just as they can do with investments funded by SRS monies and/or cash). Today, 1 in 3 customers chooses to start their first investment with us by tapping on their CPF funds.

Lower costs

As a wealth advisor, we believe that minimising cost, be it through our Endowus Fee or the funds' fund-level fees, is the surest way to better returns.

We started providing our services at a low cost of 0.4% p.a. — we did this before CPF mandated the lowering of wrap fee from Oct 1, 2020. When CPF lowered the wrap fees, it meant no more sales charges imposed by any financial institution, with platform charges cut to a cap of 0.4% p.a. 

But right from the start, we also cracked open a few insider secrets and levelled the playing field for the ordinary investor for all funds, whether you are investing using CPF funds, SRS savings, or cash. We know that several funds are constructed with different tiers or classes. Institutional investors access the funds at lower costs than retail investors, even though these cheaper classes of funds can be sold to retail investors too. If available, Endowus offers those classes of funds to our retail clients. 

If not, then any commission that fund distributors earn from the fund management companies — known as trailer fees — is all fully returned to investors. 

This is our unique commitment to investors to stay independent from conflict of interest; we remain the only digital platform in Singapore to consistently do so. By the end of 2021, we have returned to customers more than $650,000 in commissions on investments made through CPF funds alone.

For clients who want to invest in single funds with exclusive access and 100% Cashback on trailer fees, they can choose their own fund at an even lower cost of 0.3% p.a. 

All of this means that even after the mandated cut in wrap fees in late 2020, we are still the cheapest way to invest your CPF in an advised portfolio. 

Endowus is also the first digital platform where CPF members can invest their CPF OA in passive low-cost funds that track the S&P 500 Index and the MSCI World Index. 

Our existing CPF portfolios are unique to Endowus with funds such as the Infinity US 500 fund. We make recommended portfolio changes, and have partnered with fund managers to give access to the lower cost Infinity Global Stock index fund

Strong 2021 performance

Our Flagship Portfolios are created with low-cost, diversified funds. Despite market uncertainty brought on by Covid-19, the Endowus CPF Flagship Portfolios delivered positive returns for most clients in 2021, generating 17% in returns for the 100% Equity Portfolio.

Our focus is on diversified funds suitable for clients planning for retirement over the long term. The access to broad-market exposure allowed our clients to capture market gains in 2021 and enjoy higher returns for the risk they take.

Endowus Flagship CPF Portfolio Returns

SGD, monthly data as of 31 December 2021

2021 2020 2019 2018 10Y
Endowus CPF Portfolio Performance (net of fund-level fees)
Very Aggressive (100-0) 17.0% 16.0% 25.5% -6.4% 12.6% 228.0%
Aggressive (80-20) 12.8% 14.3% 21.5% -5.1% 10.7% 177.0%
Balanced (60-40) 9.1% 12.6% 17.7% -3.9% 8.9% 134.7%
Measured (40-60) 5.3% 10.4% 13.9% -2.2% 7.0% 97.2%
Conservative (20-80) 1.5% 8.5% 9.6% -1.0% 5.1% 63.8%
Very Conservative (0-100) -2.1% 6.6% 6.1% 0.1% 3.1% 36.0%
Index Net Total Returns (incl.dividends without fee deduction)
MSCI All Country World Index 20.9% 14.2% 24.9% -7.6% 12.3% 218.6%
MSCI World Index 24.2% 13.9% 25.9% -6.9% 13.1% 243.6%
MSCI Emerging Markets Index -0.6% 16.3% 16.8% -12.9% 5.9% 77.4%
S&P 500 Index 31.2% 16.3% 29.7% -2.5% 17.0% 380.4%
Global 60:40 Index 11.6% 11.1% 17.9% -4.0% 3.5% 40.5%
BbgBarc Global Aggregate Index -1.3% 5.4% 7.7% 1.1% 5.0% 62.2%
JPM EM Bond Index -1.5% 5.9% 14.4% -4.6% 8.8% 133.4%

Source: Endowus Research, Bloomberg.

CPF investments made easy

We have also made CPF investments more digitally accessible for our clients. You can find out how much CPF you can invest when you create an account with us. We extract your CPF balances through Singpass; all account creation details are automatically populated.

Critically, with UOB Kay Hian as CPF investment administrator, you can invest in a portfolio of funds with minimal agent bank fees. This will be more cost efficient when compared with investing in single funds or single stocks with CPF monies.

Investment horizon and costs matter

While commentators may have their reservations about CPF investing, and may highlight poor historical outcomes, it is important to remember the context.

It was only in late 2020 that all CPFIS fees for unit trusts were reduced. A recent update by CPF in September 2021 showed that 83% of CPF members who invested their CPF savings have made more than 2.5% p.a. in the past year. 

Performance of CPF members who invested their CPF savings

It is important to acknowledge that short-term investment returns are highly dependent on how the markets have performed. Markets have reacted to the ongoing Russia-Ukraine war, reflecting concerns over the structural impact that this latest geopolitical crisis will have on global economies for years to come. 

But it is just as important to remember that retirement monies are meant to be invested with a long-term horizon in mind. The savings are worked harder so they have the best chance of reaping good returns by passively tracking the market through low-cost, diversified funds. 

CPF is an important part of our retirement goals, and we should be cautious with managing and investing it. Since our official launch in Q4 2019, Endowus has been an advocate for Singaporeans to manage their CPF better. Invest now for better peace of mind in your retirement years.

Learn more about our options on CPF investments, or read more on CPF on Endowus Insights.

Investment involves risk. Past performance is not necessarily a guide to future performance or returns. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Rates of exchange may cause the value of investments to go up or down. Individual stock performance does not represent the return of a fund.

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