PPLI vs 13O fund or 13U: how a Singapore family should choose
A family sells a regional logistics business and ends up with roughly S$30 million in a Singapore investment holding company. Within a month two proposals land on the table. A corporate services firm suggests setting up a single family office with a section 13O fund so the portfolio's investment income is exempt. A private banker suggests a private placement life insurance policy instead, or as well. Both pitches use the words "tax efficient" and "succession". They describe very different things.
To choose, a family resident in Singapore needs to know what each structure legally is, what the 13O and 13U schemes demand as of October 2026, and where the money actually goes. Sometimes the answer is a policy. Sometimes it is a fund, or both, and quite often it is neither. How a policy is taxed in a resident's hands is a separate subject, covered on our page about PPLI and tax in Singapore.
Two different legal animals
A 13O or 13U arrangement is a fund that the family owns, managed by a fund management company in Singapore, usually the family's own single family office. If MAS approves the application and the conditions keep being met, the fund's specified income from designated investments is exempt from Singapore tax. The family office company that runs it is a separate taxpayer: its management fees are ordinary business income taxed at the 17% corporate rate.
Section 13O (and the related 13OA scheme) is aimed at Singapore funds: under 13O the fund vehicle is a company incorporated and resident in Singapore. Section 13U, sometimes called the enhanced tier, accepts a wider range of vehicles and residences but demands a larger fund and more staff.
A PPLI policy is a contract with a life insurer. The insurer owns the investment account; the policyholder owns contractual rights measured by its value, plus a death benefit payable to named beneficiaries. Nobody has to employ anyone in Singapore, and no MAS incentive is involved. You also get no investment team with it, and no Singapore operating presence. Governance for the next generation has to come from somewhere else. Our overview of PPLI for Singapore residents explains the mechanics.
What 13O and 13U require as of October 2026
MAS has changed the family office conditions several times. The April 2022 revision introduced local spending and capital deployment rules; applications from 5 July 2023 faced higher thresholds; the October 2024 circular extended the schemes to 31 December 2029; and a circular of 31 July 2026, effective 1 August 2026, relaxed several conditions for funds managed by single family offices. Advice drafted before August 2026 may quote figures that no longer apply. The current position, as summarised from that circular:
| Condition | Section 13O / 13OA | Section 13U |
|---|---|---|
| Minimum assets in designated investments | S$20 million, tested at application and at the end of each financial year | S$50 million, tested the same way |
| Investment professionals | Two, at least one not a family member; may apply with one and hire the second by the end of the financial year relating to the first year of assessment | Three, at least one not a family member; may apply with two and hire the third on the same timetable |
| Annual local business spending | S$200,000 if assets are below S$250 million; S$500,000 from S$250 million up to S$2 billion; S$1 million at S$2 billion or more | |
| Capital deployment | The lower of 10% of assets or S$10 million in qualifying investments (three broad categories, with some weighted more heavily) | |
| Banking | A private banking account with an MAS-licensed financial institution (existing awardees had three months from 1 August 2026 to comply) | |
| Scheme expiry | 31 December 2029, unless extended | |
Two things the table does not show. Local business spending counts salaries and other costs incurred in Singapore, so a family that would employ investment staff here anyway may already meet much of it. And capital deployment is real money that has to sit in Singapore-linked investments the family might not otherwise choose. Funds approved under earlier rules have their own transitional terms, so an existing awardee should check its letter of award rather than this table.
First ask what tax there is to save
Singapore does not tax capital gains as such. IRAS treats gains on shares and financial instruments held as personal investments as capital and outside the charge, although a pattern of trading can make gains taxable income. A resident individual is also generally exempt on foreign-sourced income received in Singapore, on one-tier Singapore dividends and on interest from approved banks. Someone holding a listed portfolio in their own name may therefore pay very little Singapore tax already. For that person a 13O fund exempts income that was barely taxed, and a policy wrapper defers tax that was barely there.
The picture changes when the money sits in a company, as it does for many families after a business sale. A company pays 17% on interest and other investment income it receives in Singapore, including foreign interest remitted here, and it carries more risk than an individual of gains being treated as trading income. That is the problem 13O and 13U were built for.
Two families, worked through
Illustration only. The yields, fees and structures below are assumptions chosen to show the arithmetic, not quotes or forecasts.
The S$30 million holding company. Suppose the portfolio earns 4% a year in interest, or S$1.2 million. At 17% that is S$204,000 of corporate tax before reliefs; the partial exemption on the first S$200,000 of chargeable income would trim it by up to about S$17,400. A 13O fund could remove most of that bill. Against it, the family must spend at least S$200,000 a year in Singapore, which is about 0.67% of S$30 million, employ two investment professionals including one outsider, place S$3 million (10%, the lower figure here) in qualifying investments, and keep the assets above S$20 million at every financial year end. If the family would have hired an investment manager regardless, the saving and the spending are close to a wash in year one and improve as assets grow. If the office exists only to qualify, the tax saved largely pays for the office.
Identify the policy, jurisdiction and decision you need to examine. Use the consultation form to describe the issue and the professional support you are seeking.
Describe your question →One market fall matters here too. A portfolio that drops from S$30 million to S$19 million fails the S$20 million test at that year end, which puts the incentive in question for that period. A family close to the floor carries that risk every December.
The S$400 million family. Here the minimum spending is S$500,000, about 0.13% of assets, and the capital deployment requirement caps at S$10 million, or 2.5% of assets. Neither number troubles a portfolio this size. The family almost certainly employs professionals already, and 13U is within reach. At this level the fund question is mostly operational. If PPLI appears at all, it is likely to be a carve-out for a defined purpose, not a second home for the whole portfolio.
Where a policy does work a fund cannot
A fund holds assets. It does not pay anything when someone dies, and fund shares pass under the shareholder's will or through whatever holding structure sits above them, with probate in every country where the shares or the holding company are situated. A policy pays a death benefit to named beneficiaries under the contract. For a family spread across several countries, that can matter more than any tax figure; our page on succession planning in Singapore with a life policy covers how nominations and trust arrangements interact with it.
The second job is portability. A 13O exemption is a Singapore benefit tied to Singapore conditions. A child who moves to London, Sydney or New York takes their share of the family fund into a tax system that may treat a foreign fund harshly. A policy designed for the right jurisdiction can sometimes travel better, though only if it was built for that country's rules from the start.
The third is scale. A family with S$8 million set aside for long-term support cannot reach the 13O floor at all. A policy has its own minimums, set by each insurer, but they are typically lower than the cost of running a regulated fund.
What a policy does not do is let the family run the money freely. The insurer owns the assets and appoints or approves the manager, and many tax regimes require that the policyholder does not direct individual investments. If you want your own team picking positions every day, what you are describing is a fund. More on this in investor control and what a policy can hold.
A quick way to sort the options
| If this describes the family | Usually points towards |
|---|---|
| Listed portfolio held personally, all family members staying in Singapore | Possibly neither; the existing tax position may already be efficient |
| Investment income taxed in a Singapore company, assets well above S$20 million, appetite to hire staff | A 13O or 13U fund |
| A defined pool for heirs, with beneficiaries or future residence in other countries | A policy designed for those countries |
| Assets below the 13O floor, or no wish to run an office | A policy, or simply a well-run discretionary mandate |
| A large family wanting an investment platform and a ring-fenced succession pool | A fund for the core, possibly a policy for the carve-out |
Before signing anything, put these questions to both advisers in writing:
- What Singapore tax does the family pay today on these assets, in dollars, and what will each proposal change?
- What is the all-in annual cost for ten years, including staff, administration, custody, insurance charges and exit costs?
- Which of those costs would the family incur anyway?
- Who legally owns the assets, and what happens on incapacity and on death?
- How does the structure look to a family member who becomes resident in another country?
- For a fund: what happens if assets fall below the minimum at a year end, and what after 2029? For a policy: is the person selling it licensed to do so for a Singapore resident?
Combining the two
Families sometimes ask whether a policy could hold the family's 13O fund, or whether the fund could own a policy. Either may be possible in a particular case, but don't assume it. The insurer has to accept the fund as a permitted investment, and the investor control rules of each relevant tax system still have to be met. MAS conditions apply to the fund whoever owns it.
Two structures side by side, each doing its own job, are usually easier to defend than one nested inside the other. Our PPLI break-even tool helps test whether the policy half earns its cost.
Frequently asked questions
Is PPLI an alternative to a 13O fund?
Only partly. A 13O fund exempts a Singapore fund's investment income and needs a family office with staff and local spending. A policy is an insurance contract with a death benefit and named beneficiaries. They overlap on investment returns and differ on almost everything else.
What is the minimum fund size for 13O and 13U in 2026?
For funds managed by single family offices, S$20 million in designated investments for 13O and S$50 million for 13U. Since 1 August 2026 the minimum is tested at application and at the end of each financial year.
How much must a family office spend in Singapore each year?
Under the conditions effective 1 August 2026, at least S$200,000 if assets are below S$250 million, S$500,000 from S$250 million to below S$2 billion, and S$1 million at S$2 billion or more. Salaries paid in Singapore count towards it.
Does a Singapore resident pay tax on capital gains?
Generally not on gains from investments held as capital. IRAS can treat gains as taxable income where the facts show trading, and companies face that risk more often than individuals.
Is the family office company itself tax exempt?
No. The exemption applies to the fund's specified income. The family office company that manages the fund is taxed on its management fees at the normal corporate rate.
When are the 13O and 13U schemes due to expire?
MAS extended them to 31 December 2029. Whether they will be extended again, and on what terms, had not been announced as of October 2026.
Sources
- MAS: Tax incentive schemes for funds managed by single family offices
- RSM Singapore: MAS updates on tax incentive schemes for single family office funds (summary of the MAS circular of 31 July 2026)
- Baker McKenzie: Singapore tax incentives changes for funds and family offices (August 2026)
- PwC Singapore: Extension of fund tax incentive schemes (MAS circular FDD Cir 10/2024)
- IRAS: Gains from sale of property, shares and financial instruments
- IRAS: Corporate income tax rate, rebates and tax exemption schemes
Editorial standards: sources checked as of October 2026; examples are illustrations, not quotes or forecasts.
This page is general information, not tax, legal or investment advice. MAS incentive conditions and tax rules change, and the right structure depends on the family's facts. Take advice from a Singapore tax adviser and a licensed financial adviser before acting.
Michael founded EWP Financial after a career that began in risk-management consulting more than 40 years ago. He is the author of The PPLI Papers and writes on policy design and cross-border planning.
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