“I Consider CPF As A Bond”

I have been hearing this occasionally in investment chat groups and conversations among acquaintances, friends and relatives. In this post I will give my opinion on whether the monies in our Central Provident Fund (CPF) accounts are considered a bond.

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Breaking it down, it depends on three main factors: the definition of a bond, the aspect of portfolio management, and the age of the investor.

Definition of a bond

According to Investopedia, a bond is a fixed-income investment issued by governments or corporations to raise funding¹. A bond contains three components: the principal, the coupon rate and the duration.

Looking at CPF from our lenses, the principal comes from part of our pay and our employers’ contribution, with the interest contributed by the CPF Board, and technically there is no defined end date at which the entire sum would be returned (some may argue on this but let us keep it simple). Simply speaking, we are owing money to ourselves, and that sounds weird to be called a bond.

Some proponents of CPF being a bond highlighted that the monies are invested in Special Singapore Government Securities (SSGS) issued by the Singapore Government², which is a government bond. However, in my opinion, this label is a bit off as there is an additional layer of ownership; we should be looking at how it works between the investor and CPF, rather than the other side on how CPF invests (e.g., we invested in a company bond who in turn use the proceeds to invest into equities, does not mean we are directly invest in equities with the same said monies).

Hence the conclusion: CPF is not a bond strictly by asset class definition.

Portfolio management

For portfolio management, if we treat CPF as a bond, it is natural to employ the disposable income (i.e., salary from our day jobs) to invest in other asset classes. This was highlighted in my eBook The Bedokian Portfolio(pg. 167-168) where the various portfolios in the Portfolio Multiverse are seen as one gigantic portfolio. The CPF works like an almost risk-free asset class of sorts to help buffer the volatility of the other asset classes. In my belief, this make-up works well with the investor planning to retire at the conventional retirement ages (i.e., from 55 onwards).

Regarding the rebalancing aspect of portfolio management, this is where the problem comes in: one can contribute into CPF but cannot withdraw from it (unless he/she is age 55 and above). Therefore, in the gigantic portfolio model described in the previous paragraph, if equities or other asset class portions are shrinking, there is no way to withdraw from CPF and inject into them.

Again, this can be solved with the Portfolio Multiverse method: we can have the various portfolios (disposable income, CPF, etc.) work separately with one another but also working together as one (“differentiate, then integrate”). With the CPF Investment Scheme, one could invest in selected funds, individual counters and gold (subject to limits) with CPF (the Ordinary Account, or OA, in particular), thus forming its own separate portfolio. The remaining cash part could be treated as a bond-like instrument generating at least 2.5% per annum.

So, my verdict on this part: it depends on the treatment of CPF by the individual.

Age of the investor

As implied in the previous section, if an investor is aged 55 and above, he/she has a choice of whether to leave the funds in the CPF OA, or to withdraw and plough the monies into other portfolios, and with this, the almost risk-free CPF is construed to be a bond-like instrument. If going by the gigantic portfolio model, do note that for rebalancing funds into the CPF, it is subject to the prevalent annual contribution limit, which is SGD 37,740.

Bringing in the component of CPF-Life, a scheme where CPF account holders would receive a monthly payout from age 65 onwards, there is a view that it is like a perpetual bond paying out coupons indefinitely. This is correct from a certain angle, but the actual term to describe CPF-Life as is an annuity scheme; perpetual bonds (or perps) is more of a description for fixed income, again going back to section of the definition of a bond.

Accordingly, my view here is: for CPF, it depends on the individual treating it, and for CPF-Life, it is not a bond.

So how to define CPF?

According to CPF Board, CPF is a comprehensive social security system that enables working Singapore Citizens and Permanent Residents to set aside funds for retirement. It also addresses healthcare, home ownership, family protection and asset enhancementt³. The main function of CPF is a regulated, high-yielding savings account to prepare for retirement, and that is the answer. It is also a pool of monies that could be used for investment, residential property mortgage payments, medical insurance, etc.

Due to its policy and regulatory nature, CPF is not as liquid as funds or portfolios built from our disposable income. Personally, I treat CPF as a separate portfolio, one of a few that makes up our Portfolio Multiverse.

Disclaimer

1 – Fernando, Jason. Bonds: How They Work and How to Invest. Investopedia. 14 Nov 2025. https://www.investopedia.com/terms/b/bond.asp (accessed 15 Nov 2025) 

2 – How are CPF monies invested? Policy FAQs. CPF. https://www.cpf.gov.sg/member/infohub/cpf-clarifies/policy-faqs/how-are-cpf-monies-invested (accessed 15 Nov 2025)

3 – What is the Central Provident Fund (CPF)? FAQs. CPF. https://www.cpf.gov.sg/service/article/what-is-central-provident-fund-cpf (accessed 15 Nov 2025)