In this e-Alert, we review the position of participating funds in Singapore as of year-end 2025, based on public information published in 2026, and compare this to the position at year-end 2024. We examine investments, along with solvency and capital.
Key observations:
- Investment returns for par funds in Singapore were strong in 2025, with the simple average return across all companies of 9.35%, following on from 6.16% in 2023 and 5.37% in 2024, all in excess of the 4.25% illustration rate cap.
- The strong investment returns should have helped to improve bonus supportability, although the impact of very poor returns in 2021 and 2022 is still being felt.
- Despite the strong investment performance, fund solvency ratios (FSRs) have dropped as a result of the rise in Singapore Government Security yields.
- Inconsistent movement in SGD and USD yield curves, as well approaches to currency hedging, are believed to be part of the reason for the fall in FSRs and the wide range in investment returns observed between different funds.
- Despite the economic effects of the war in Iran, equity markets have continued their strong growth in 2026 to date, signalling a positive outlook for fund performance again in 2026.
- However, current geopolitical events such as the wars in Iran and Ukraine make economic outlooks for the rest of 2026 quite difficult to predict.