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Insurance participating funds have long been central to the savings and investment goals of many Singaporeans. If you own whole life, endowment, or retirement policies, chances are you’re part of a participating fund—sometimes called a “par fund.” So, how did these funds perform in 2025, and what should policyholders really be paying attention to beyond the headlines? Let’s break it down in plain English.

What’s a Participating Fund and Why Should You Care?

Think of a participating fund as a giant investment pot managed by your insurance company. Your premiums—along with those of other policyholders—get pooled together and invested in a mix of assets like bonds, stocks, and even property. The goal? Grow the pot so everyone can share in the profits through annual bonuses, on top of the guaranteed returns your policy promises.

Key points about participating funds:

• Policyholders get both a guaranteed payout and extra bonuses that depend on how well the fund’s investments do.
• These bonuses aren’t fixed—they go up and down over time, depending on market conditions and how smartly the fund is managed.
• The fund covers things like management fees and administrative costs before sharing profits with you.

How Do These Funds Work Behind the Scenes?

When you pay your premiums, the insurer collects and invests the money. Every year (or sometimes more frequently), they crunch the numbers: how much did their investments earn, and what costs did they have to cover? After that, your insurer will decide how much bonus to declare.

But here’s the thing: they don’t just look at last year’s investment gains in isolation. Insurers smooth out the returns before declaring bonuses, which means you won’t see wild swings just because the market had a great (or terrible) year. This smoothing protects policyholders from year-to-year market jitters, giving you a steadier ride. More on that later!

2025 Performance: The Bounce Back Story

Let’s talk numbers! After a rough 2022, many participating funds saw strong rebounds by 2024 and stayed solid in 2025. Take a look at the table below for a snapshot:

You can see some big swings—2022 was pretty harsh, especially for Prudential and HSBC—but by 2024 and 2025, most funds had positive returns again. This recovery has a lot to do with bonus smoothing and a disciplined investment approach.

What is the Total Expense Ratio and Why Does it Matter?

The expense ratio is a figure that tells you what percentage of the fund’s assets get eaten up by things like management fees, administrative costs, and other charges. The higher this ratio, the more your actual returns get sliced.

For example:

• Tokio Marine runs a lean ship with expenses at just 0.6%—more money stays in the pot for you.
• Singlife’s expense ratio is 3.2%—that’s a much bigger bite.

A lower expense ratio means more money stays in the pot for you. Although the returns are already net of expenses, a lower expense ratio means that the fund is more efficient and may be more sustainable in the long run.

You may be shocked to see that FWD expense ratio is 77% for the year 2024. This is because FWD is a new entrant and are still building up their fund. In the previous year, FWD’s expense ratio was a whooping 720%. As noted in their announcement, in the initial years of the par fund, FWD will be providing funding to support expenses in early years of fund operations, until the fund is self-sustaining.

Bonus Smoothing: Why Your Returns Aren’t as Volatile as You Think

No one likes surprises—especially when it comes to policies purchased for stable returns, such as your endowment, whole life or retirement plan.

That’s why insurers use a method called bonus smoothing. Instead of passing every twist and turn in the financial markets onto you, they use good years to buffer the bad, and vice versa. It’s a bit like evening out the bumps on the road so your journey feels more comfortable.

• In bad years (say, 2022), they tap into reserves built up during better years, so bonuses don’t crash.
• In good years (like 2024’s recovery), not all profits are handed out—they’re partly set aside for the next downturn.

This approach shields policyholders from the shock of market volatility, letting you plan with more certainty. If you are interested to learn more about participating funds, you can read more about it directly from Life Insurance Association Singapore here.

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How to Choose the Best Singapore Par Fund 2025: Top Factors to Consider

1. Net Returns After Expenses

   • Look beyond gross performance to actual policyholder returns
   • Factor in expense ratios over 10+ year periods

2. Consistency Over Time

   • Evaluate performance across market cycles
   • Consider bonus smoothing effectiveness during downturns

3. Financial Strength of Insurer

   • Check credit ratings and solvency ratios
   • Larger AUM often indicates more investment options

4. Policy-Specific Fund Performance

   • Verify which specific par fund your policy uses
   • Request historical data for your exact fund

Red Flags to Avoid

• Very high expense ratios (above 2%)
• Inconsistent bonus declarations
• Limited transparency in fund reporting
• Poor long-term track records

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Final Thoughts

2025 brought a welcome comeback for Singapore’s participating funds, but savvy policyholders know that there’s more to the story than headline returns. Pay attention to the details—expense ratios, bonus smoothing, and, above all, the precise fund tied to your policy. Annual reports and fund-specific updates are worth reviewing to ensure your insurance savings plan is delivering as promised.

If you’re unsure about the performance of your participating fund or want to understand how these numbers directly impact your payout, don’t hesitate to reach out to your insurer or financial adviser. Being well-informed helps you make the best choices for your long-term protection and savings.