Par Fund Singapore 2026: How It Works, Bonuses Explained, and What to Watch Out For

If you have an endowment plan or whole life policy in Singapore, your returns are likely linked to a participating fund — commonly called a par fund. Understanding how par funds work is essential before you commit to a long-term policy.

Disclaimer: This article is for general information only. Data verified as at 26 September 2026. It is not financial advice. Consult a licensed financial adviser before making any insurance or investment decisions.

What Is a Par Fund in Singapore?

A par fund (participating fund) is a pooled investment pool managed by a life insurer. When you buy a participating product, your premiums go into this fund alongside those of all other par policyholders at that insurer.

The fund is invested across a mix of assets (mainly bonds, equities, and property) with the goal of generating returns shared with policyholders through bonuses. Par funds are regulated by MAS under the Insurance Act (Cap. 142). Every insurer must maintain a separate par fund distinct from their shareholders’ fund, ensuring policyholder assets are ring-fenced.

Common par products in Singapore include participating endowment plans, participating whole life policies, and participating retirement income plans.

For a detailed breakdown of how endowment plan returns are benchmarked, see our guide on endowment plan interest rates in Singapore.

How Reversionary and Terminal Bonuses Work

Par fund returns reach you through two types of bonuses:

Reversionary Bonus (Annual Bonus): Declared annually by the insurer based on the par fund’s performance during the year. Once declared, this bonus is typically guaranteed — it becomes part of your policy’s accumulated value and cannot be taken away. Reversionary bonuses compound over the life of your policy, which is why par endowment plans with longer tenors accumulate meaningful bonuses over time.

Terminal Bonus (Special Bonus): Paid out only when a policy event occurs — maturity, death claim, or surrender. Unlike reversionary bonuses, terminal bonuses are not guaranteed and are paid entirely at the insurer’s discretion based on the fund’s performance at the time of the event.

Terminal bonuses can form 30 to 60% of the “illustrated” total return shown in your product summary, which is why actual payouts at maturity can differ significantly from what was illustrated at purchase.

MAS Illustrated Investment Returns (IIR) Explained

MAS requires all insurers to use standardised Illustrated Investment Rates of Return (IIR) when projecting policy values. These rates are set by the Life Insurance Association Singapore (LIA) in consultation with MAS.

Scenario	IIR Rate	What It Means
Upper (Optimistic)	4.25% p.a.	Used for the “good scenario” projection in policy illustrations
Lower (Conservative)	3.25% p.a.	Used for the “poor scenario” projection in policy illustrations

Important: These IIR rates are not guaranteed returns, nor are they upper/lower limits of what the fund can earn. They are purely standardised assumptions used so consumers can compare across products on a like-for-like basis. Actual par fund performance depends on the insurer’s asset allocation and investment skill.

Par Fund Asset Allocation in Singapore

Each insurer manages their par fund differently. The typical Singapore par fund holds a mix of fixed income bonds (50 to 70%), equities (15 to 30%), real estate including S-REITs (5 to 15%), and cash.

MAS requires insurers to publish an annual Par Fund Performance Report disclosing fund performance, asset allocation, and bonus declarations. You can find these on each insurer’s website — search for “Participating Fund Annual Report” or “Par Fund Bonus Update.”

In FY2025, AIA Singapore paid out S$622 million in bonuses to par policyholders. Singlife maintained its reversionary, cash, and terminal bonus rates for all policies. Prudential Singapore also published its FY2025 par fund update showing sustained fund performance.

For a broader view of insurance savings options alongside par funds, see our guide on single vs regular premium savings plans in Singapore.

Par vs Non-Par: Key Differences

Feature	Par Product	Non-Par Product
Guaranteed return	Partial (base only)	Fully guaranteed
Non-guaranteed component	Yes — bonuses	None
Upside potential	Higher if fund performs well	Capped at stated rate
Typical tenor	10 to 25+ years	1 to 5 years
Best suited for	Long-term savers comfortable with some uncertainty	Savers who want certainty and shorter tenors

For a deeper head-to-head analysis, see our par fund vs non-par endowment comparison.

How to Evaluate a Par Fund Before You Sign

Before committing to a participating product, ask these five questions:

What is the guaranteed portion of the illustrated payout? Ask your adviser to separate the guaranteed from the non-guaranteed components. The guaranteed amount is what you will receive even if bonuses are cut to zero.
What is the insurer’s par fund performance history? Check the annual par fund performance report. Look at the fund’s actual net return over 5 to 10 years versus the IIR benchmarks.
What is the asset allocation of the par fund? A more equity-heavy fund has higher growth potential but more volatility. A bond-heavy fund is more stable but may deliver lower long-run returns.
How long must you hold the policy to receive the terminal bonus? Many par products only pay terminal bonuses at maturity. Early surrender eliminates this component entirely.
What is the surrender value in year 1, 3, and 5? This reveals how quickly you break even on premiums paid and how punitive early exit is. For long-term par products, it is common to be in a loss position for the first 5 to 8 years.

To estimate how much coverage you may be underinsured by, try our insurance gap calculator.

For endowment plan recommendations specifically, see our roundup of the best endowment plans in Singapore.

Frequently Asked Questions About Par Funds in Singapore

What is a par fund in Singapore?

A par fund (participating fund) is a pooled investment fund managed by a life insurer. Policyholders who buy participating products contribute premiums into this fund. The fund is invested across bonds, equities, and property. Returns are shared with policyholders through reversionary bonuses declared annually and terminal bonuses paid at policy maturity or on a claim event.

Are par fund returns guaranteed in Singapore?

Only partially. Par products consist of a guaranteed component (the base sum assured and declared reversionary bonuses) and a non-guaranteed component (terminal bonuses and future reversionary bonuses not yet declared). The non-guaranteed portion can represent 30 to 60% of the illustrated total payout. Actual returns will differ from illustrated figures if the par fund performs differently from the assumed IIR rates.

What is the MAS illustrated investment return (IIR) for par funds?

As of 2026, MAS requires insurers to illustrate par product returns at two standardised rates: 4.25% p.a. (upper scenario) and 3.25% p.a. (lower scenario), set by the Life Insurance Association Singapore (LIA). These are not guaranteed returns — they are standardised assumptions used so consumers can compare products on a consistent basis.

How is a reversionary bonus different from a terminal bonus?

A reversionary bonus is declared annually and, once declared, is typically guaranteed — it cannot be taken away and compounds over time. A terminal bonus (special bonus) is paid only when the policy matures, on a death claim, or sometimes on surrender. Terminal bonuses are not guaranteed and are paid at the insurer’s discretion based on fund performance at the time of the event.

Can I lose money in a par fund product?

If you surrender the policy early, yes. Most par products have significant surrender penalties in the first several years — it is common to receive less than your total premiums paid if you exit before year 5 to year 8. The terminal bonus is also forfeited on early surrender. Holding the policy to its full term is required to realise the full illustrated return.

How do I find my insurer's par fund performance report?

MAS requires Singapore life insurers to publish annual par fund performance reports. Visit your insurer’s website and search for “participating fund annual report,” “par fund update,” or “bonus announcement.” AIA, Great Eastern, Prudential, Manulife, Singlife, and NTUC Income all publish these annually.

Is a par fund better than a non-par endowment plan?

It depends on your priorities. Par products offer the potential for higher returns if the fund performs well, but with less certainty on the non-guaranteed component. Non-par products offer fully locked-in returns. Par products are generally more suitable for long-term horizons (10 years and above) where bonus accumulation can work in your favour. See the par fund vs non-par comparison linked in the article for a detailed breakdown.

What happens to the par fund if the insurer fails?

MAS regulations require that the par fund is ring-fenced from the insurer’s shareholders’ fund. Par fund assets belong to policyholders and cannot be used to pay the insurer’s general liabilities. Singapore’s Policy Owners’ Protection (PPF) Scheme, administered by the SDIC, also provides additional protection — guaranteeing up to S$500,000 per policyholder per insurer for life insurance policies.

Should I use SRS or CPF to buy a par endowment plan?

Some par endowment plans are SRS-eligible, allowing you to use Supplementary Retirement Scheme funds for a tax relief benefit on top of the illustrated return. CPF funds can be used for CPFIS-approved par products, though the hurdle rate is higher — your par product must outperform the CPF Ordinary Account’s 2.5% p.a. to add value. Confirm eligibility directly with your insurer or financial adviser.

Start Building Your Financial Foundation

Understanding par funds is one piece of the puzzle. For tools to help you plan your retirement and insurance needs, explore our free Singapore financial calculators.

Retirement Planning Calculator

Insurance Gap Calculator

Looking for a robo-adviser to complement your insurance savings? Endowus (code: 2V343) and Syfe (code: SRPRFFFCD) both offer Singapore-focused portfolios that may complement a long-term par endowment strategy.

This article is for general information only and does not constitute financial advice. Always consult a licensed financial adviser before making any insurance or investment decisions.