Imagine playing a lottery where you will not lose the money you bet, even if you did not win the jackpot. Imagine if you bet $100, and after a year that $100 turns into $102.

Sounds too good to be true? Not really. This concept is called Prize-linked savings (or some people like to call it the No-lose lottery), and has been implemented before in countries such as Germany, Japan, and the UAE.

What is Prize-linked savings (PLS)?

PLS is designed to give people an incentive to save, or to get lottery buyers to 'spend' their cash on the PLS instead.

How it works is simple: Suppose the bank normally gives 1% interest annually, and a person puts money into PLS. Instead of earning 1% interest, that person earns 0.8%. The remaining 0.2% is pooled together with the interest of others who have saved with the PLS. This pool is then given out as lottery to a few lucky winners.

Why implement this on CPF?

The CPF recently announced that it would accept recommendations offered by a panel. You can read all about the changes in our 60-second summary.

The changes to CPF were in response to Singaporeans' request for greater flexibility in how they can withdraw their retirement monies.

Many times the argument against allowing Singaporeans from withdrawing their entire CPF account is because there is the fear that many of them would squander their retirement pot, especially with temptations like gambling.

But what if we can tap on Singaporeans' love for the game of chance as a way for them to top up their CPF and fuel their own retirement?

CPF top-ups as a PLS

Any time a Singaporean decides that they want to punt some of their money away at Singapore Pools, they could perhaps put it in a special account within the CPF instead.

The money would earn a lower interest, maybe 2% instead of the standard 2.5%, but the remaining interest that is creamed off goes into a prize pool for CPF 'punters' to win.

Of course, the money put into this account can only be taken out at a certain time - like 55 or 67. At the end of the day, punters may 'lose' in this lottery but their money is safely in the CPF and accumulating interest for their retirement.

Sounds like a better deal than giving it to Singapore Pools or paying the $100 casino levy.