Spirt of Enterprise Award

The Spirit of Enterprise invites nomination for the 2006 awards. Any business that meets the criteria below can be nominated, inculding pizza parlors, clothing stores, discos etc.

Criteria: These are just general guidelines, and the panel exercise flexibility. (for past nominees see: www.soe.org.sg )

1. In business for at least 5 years and is successful enough to provide the family’s needs.

2. Is in good standing with whoever licenses the business and is not under any court, tax or police filing.

3. A small to medium enterprise, which has an inspiring and interesting story to be told. Preferably, it has some historical antecedents in the history of Singapore.

4. Special attention will be paid to an entrepreneur who is innovative, forward-looking, constantly planning to bring the company to another greater phase. For example, entering new markets, introducing new products or services or willing to use new technologies to increase productivity and consumer services.

5. Not a recipient of Temasek or any similar government investment programmes.

6. Has not been honoured by any similar group.

Send your nomination to: www.soe.org.sg

Estate duty puts retirees in a dilemma

Editor
Forum Page
Straits Times

I refer to the letter from Ms Janice Ong entitled "Estate Duty puts retirees in a dilemma" (ST 28 Dec 2005).

Currently, estate duty is payable on liquid assets in excess of $600,000. Ms Ong said that a retiree needs more than $600,000 to maintain a reasonable standard of living.

I wish to give the following suggestions to a retiree with large savings on how to avoid paying estate duty.

1. Invest a significant portion of your lifetime savings in a life annuity. It pays an attractive monthly income which is guaranteed for a lifetime. As the life annuity includes the gradual release of capital during the expected lifetime of the retiree, it will be free of estate duty.

2. Invest in a participating annuity which increases with bonus in most years. The increased payment will help to offset the higher cost of living.

3. Keep up to $600,000 in liquid assets. This gives you the flexibility to meet unexpected cash needs, and is within the exemption limit.

4. Transfer any remaining savings to your children earlier, rather than on your death. If you do not wish to make a lump sum gift, you can buy a term annuity to transfer the money in annual sums over a certain number of years.

You can find more about life annuity from our website, http://www.income.coop/insurance/glannuity

NTUC Income has a market share of about 60 percent of all annuities sold in Singapore. Nearly 30,000 people have bought an annuity from us. Most retirees invest between $50,000 to $100,000. The largest investment in an annuity exceed $1 million.

Tan Kin Lian
Chief Executive Officer

1,500 people visited educational website within 2 days

1,500 people visited the educational website, www.KnowYourInsurance.com.sg,
within 2 days of its launch.

180 passed the test. They are eligible for a discount when they buy insurance from NTUC Income.

NTUC Income offers fair settlement of claims

NTUC Income offers fair settlement of claims. Sometimes, the clainmant is badly advised and tried to ask for a higher compensation. Here is a recent case.

-------------------------------------------------------------

Our insured, who was driving a motor cycle, had hit into the deceased, who was crossing a 4 lane road (not at a pedestrian crossing). Approximately 2 weeks after the accident, the deceased died.

The deceased's wife made a clim in excess of $250,000 for dependency and pain and suffering suffered by her late husband.

Our claims committee made an offer to settle the claim for $35,000. The claimant rejected our offer and insisted on $250,000.

This matter was heard in court. The final award was for $26,000. With interest, the total was $29,000.

Cost of $6000 was awarded against the claimant. We were also allowed to claim for our cost of $30,000 to defend the claim in the high court.

This has been very costly for the claimant. If she had been properly advised, she should have accepted our offer of $35,000 and save a lot of money on legal expenses.

NTUC Income's contribution to NKF

In 1990, NTUC Income contributed $300,000 to set up the NKF dialysis center in Bukit Batok and $50,000 (raised from our staff and agents) for the running cost of the center. This was a special project under our 20th anniversary celebration.

In the subsequent years, we contributed a very modest sum (ie less than $5,000 a year) to the NKF. We felt that NKF was already raising more than needed from other sources.

During tihs period, we channelled our contribution to the Community Chest, which served 100 times the number of beneficiaries in Singapore. In 2005, we contribute nearly $250,000 to the Community Chest. This compriseof the contribution from the staff and matching contribution from NTUC Income.

We will find appropriate ways to support the NKF in future years, based on its future needs. We urge the public to continue its support of the NKF, who is charting its future directions.

600 people tried website within 1 week

NTUC Income's latest educational website has so far attracted more than 3,000 visitors. Last week alone, more than 600 people has registered and used this site.

We did a survey on this group of 600 users (of which 65 per cent are external users, i.e. non staff). A good 96 per cent responded that they are happy with the website and the quality of materials used.

The most popular topics are:

investment linked policies
medical insurance
i-Young (package for young people)
personal accident
motor insurance

New website to educate public on insurance

NTUC Income is pleased to announce the launch of an educational and interactive website on insurance at www.KnowYourInsurance.com.sg.

Many people may not think about insurance until they are approached by an insurance agent. Some people do not like to meet up with an insurance agent, as they fear that they may be pressured into buying insurance policies that they do not need or cannot afford. Many people also find insurance quite complicated.

However, it is important that everyone should have insurance to protect against the risk of premature death, accidents or major illnesses.

NTUC Income recently conducted a public survey to better understand the insurance needs of people between 30 to 40 years old. The results interestingly revealed that about 70 per cent of the respondents preferred learning the basic facts of insurance in their own time, if it can be made easily available to them.

KnowYourInsurance.com.sg is the new approach in educating the public on insurance.

Chief Executive Officer Tan Kin Lian said, "NTUC Income believes in educating our consumers on insurance products and helping them to make the right choices. By setting up this educational website, we provide an option to the consumer to learn about the basic facts of insurance on their own. It is an easy and fun way to learn."

The website covers the common insurance products, such as motor insurance, personal accident, financial planning, travel insurance, saving for education and medical insurance."

This website has an added, challenging feature for the visitors to test their knowledge at the end of each topic. A visitor who completes the test will also receive a discount when he or she purchases an insurance policy directly from NTUC Income.

Reply: accident with taxi leads to insurance woes

21 December 2005

The Editor
Online Forum Page
Straits Times

I refer to the letter entitled "Accident with taxi leads to insurance woes" by Jonathan Tan Meng Chye (ST Online Forum, 19 Dec 2005).

NTUC Income insures about 40 percent of all vehicles in Singapore. Our policyholders regularly encounter this type of situation. We wish to give the following advice, as a guide to motorists.

Motorists must always maintain a safe distance from the car in front. They should be able to stop in time without hitting it in the event the car in front has to stop suddenly. The recommended distance between cars is about 2 car lengths.

When a car collides squarely into the back of a car, the presumption is that the driver of the rear car was negligent in not keeping a safe distance. To overcome this presumption, the onus is on the driver to prove that the front car had cut so suddenly into his path that he was unable to avoid colliding into it.

The workshops that were approached by Mr Tan were not keen to assist him in pursuing a claim against the taxi driver, as it will be an uphill task to prove his case. He should have a witness to prove his assertion that the taxi driver had cut into his path to succeed fully or partially in his third party claim.

If Mr. Tan is able to prove his case, the law and our courts will protect him and enable him to recover his loss from the third party. Further, if Mr. Tan is able to prove that the taxi driver was negligent, he will be able to recover part of his legal costs from the taxi driver. Generally, the legal costs recoverable from the party at fault is about two-third of the costs that the successful party would have to pay his own lawyer.

In this case, we advise Mr. Tan to claim against his own insurance policy. If we are able to establish that the other driver was 80 per cent or more at fault, we will not penalise Mr. Tan's NCD.

Freddy Neo,
Claims Senior Manager

MMS initiative has got off to an encouraging start

Since the launch of this initiative one month ago , 40 policyholders had sent in their accident photos to NTUC Income.

This innovative approach helps the insurer to better handle iability dispute between the parties involved in the accident.

The policyholders are encouraged to use the mobilephone to take photographs of the damages to the vehicles immediately at the scene of the accident and to send them by MMS to NTUC Income. With the photographs as additional evidence, the assessment officers will be able to decide more accurately of the apportionment of liability between the parties.

This has proved to be effective. For 50% of these cases, the photographs showed that our policyhbolder was not at fault in the accident. For 40% of the cases, the photographs showed that our policyholder was less at fault compared to the other party.

The photographs help to strengthen the report of our policyholders, in the situation where both parties give different versions of the accidents and damages.

NTUC Income has to deal with about 200 cases of accidents each month, where both parties dispute the facts of the accident. Based on our experience, the use of the "on-the-spot" photographs will help to solve about 50% of the these disputes. This is based on the well known experience, "a picture tells a thousand words".

With the increased popularity of mobilephone cameras, we are confident that more of our policyholders will use this new service.

Policyholders can send their accident photos via MMS to 91INCOME or email us at photo@income.com.sg.

They can also call our motor hotline at 67886616 if they have any queries.

Freddy Neo
Senior Manage, Claims
NTUC Income

Policyholder is happy with our review

Dear Mr Tan,

I would like to thank you for reviewing my wife's case. I am pleased to know that you have a team and procedures in place to handle such genuine appeals.

I understand that being the largest insurer in Singapore, sometimes you do face contraints of all sorts. But this review process is necessary as it provides a very positive image as being the largest insurer in Singapore that DOES LISTEN even to small clients like us, regardless of outcome.

Thank you all and once again.

How can we serve our policyholders better in 2006?

How can we serve We asked our policyholhoders better in 2006? We asked them. Here is the reply from 174 policyholders:

1. What is your top priority for the next 12 months?

* Get a better return on your savings [ including CPF ] 61%
* Increase regular savings 39%
* Re-schedule loan to reduce interest or monthly repayment 12%

2. How do you like to achieve your goal?

* Learn financial planning from an educational website 42%
* Attend an educational seminar 27%
* See a financial adviser 20%
* See an insurance adviser 12%

3. What is your top wish from NTUC Income?

* Offer new products at a discount for existing policyholders 67%
* Organise educational seminars 27%
* Provide free financial planning advice 26%
* Improve customer service 21%

Know Your Insurance

We invite you to visit this website and try one or more of the topics. You will be asked to give your feedback at the end of the topic. We hope that you find it to be interesting.

www.KnowYourInsurance.com.sg

Saving for your child

Do you know the answes to these questions?
Visit www.KnowYourInsurance.com.sg

1. How much should a parent save for a child's education?
2. What happens if the saving is insufficient to fund the tertiary education?
3. Which type of investment is likely to give the best return on the savings?
4. Over a 15 year period, what is the difference between a low return (2% p.a.) and a high return (6% p.a.)?
5. What are the advantage of a flexible saving plan?
6. How can you reduce the risk of investment?
7. What type of rider provides adequate coverage at a low premium?

... and many more.

Is Incomeshield adequate?

You are the most open, frank and trusted CEO I hv known so far. Thank you in advance for allowing me to write directly to you.

Incomeshield advertised "Why buy expensive Shield plans when Incomeshield provides SUFFICIENT cover for B2,B1 and A class wards ?"

Q1. Does this means ALL inpatient sub-limits in Incomeshield plans A,B and C are sufficient to cover all types of operation bills in their respective wards ?

Reply: The sub-limits are sufficient for most types of hospital treatment. It may be insufficient for some major illness. But, I understand that most people are insured under a dread disease policy (life insurance policy), which will pay for these major illness.

Q2. If not, pls advise probability of one exceeding each sub-limits based on Incomeshield past claim records.

Reply: If you select the right ward in restructured hospital, the sub-limits should be sufficient for more than 90% of the cases.

Q3. When will Income offers a rider for "as charged basis, ie. without inpatient sub-limits" per Straits Times report dated 6 Jul 2005, page H21.

Reply: We have introduced a Plan P that offers higher coverage than plan A, and is suitable for private hospital. We are still working on the "as charged" rider, and have not decided on how to implement it.

Strongly believe Income will woo many undecided Shield holders to Incomeshield plans if answers to above questions are publish nationwide.

More educational talks

FROM THE PUBLIC:

It is heartening to know that you always have the interests of policy holders at heart - hence the dialogue sessions on Annuity Plans. Can I know whether you are making any more presentations for those who cannot be accommodated in the two sessions organised?

MY REPLY:

We will be holding more dialogues sessions and educational talks on annuities and other insurance products. You can get a schedule of the talks at our website: www.income.coop

http://www.income.coop/seminar/

Ideal Plan is better than Unit Trusts

Two visitors posted in my blog - that is is better to invest in a unit trust with a term rider, instead of investing in a investment linked plan. They asked for my views.

Generally, they are correct. Many ILPs have high charges and take away 1 or 2 years of savings. They also have the front end and annual spread.

The Ideal plan from NTUC Income is different. It invest 100% of the regular savings from the first month (like a unit trust). The front end spread is 3.5% and the annual charge is less than 1%. A unit trust usually has a front end spread of 5% and an annual charge of up to 2%.

By investing in our Ideal plan, the investor may be able to get 5% to 10% more over a period of 10 years - from our lower charges. It is better than invest in our Ideal plan (and select our Combined Fund) that a unit trust.

Do attend our educational talk on the combined fund. The schedule of the talk is found at: www.income.coop/seminar/

Survey: Insurance needs of young parents

108 people aged 30-40 replied to our I-survey. 71% are married with children, and 29% are either married with no children or are singles. 90% are working, and 10% are either self-employed or are looking for a job.

84% said that a young parent set aside $100 to $200 a month as a separate saving for each child.

36% said that a yong parent should insure for 5 to 10 years of earnings; 36% choose 3 to 5 years; 28% choose 1 to 3 years. The average is 5 years.

50% prefer to pay an $1,000 yearly for a life insurance for $30,000 (with return on savings); 37% prefer to pay $150 yearly for term insurance (death and accident) for $100,000; 13% prefer to pay $100 for accident insurance of $200,000.

50% said that a young parent should save 5 to 10% of monthly income on insurance; 26%
will less than 5% and 23% will save 10 to 20%. The average is close to 10%.

78% will choose term assruance (to cover death from all cases) if the budget is limited; 24% will insure for hospital or accident only.

48% prefer to buy a simple, low cost insurance plan first, and do the financial plan later; 44% prefer to do the financial plan immediately.

68% prefer to learn about the basic facts of insurance on your own; 32% prefer to rely on the advice of an insurance agent.

63% prefer to invest in a flexible, long term saving plan that gives an attractive return; 28% prefer to save in a life insurance policy that has a fixed premium and benefit.

76% prefer to buy a separate contracts for protection and for savings; 24% prefer a bundled contract.

49% prefer to approach the insurer directly for a discount: 42% prefer to get a discount from the agent; 9% will buy without a discount (to help a friend to achieve the sales quota).

Period of Survey: 5 Dec - 12 Dec 2005

Survey: Insurance needs of young people

146 young people aged 20-30 repled to our survey. 85% are employed. 15% are still studying or looking for a job.

85% said that young people need life or accident insurance, as accidents can happen.

97% said that young people should have insurance, even if they are not married, so that they can leave something for thier parents.

62% want to save $100 to $200 a month for insurance and savings, when they start work. 38% prefer to spend $10 to $20 a month for insurance protection (ie no saving).

85% said that a tertiary student should spend $10 to $20 a month to be insured, and leave something for the parents.

89% prefer a combination of hospital and accident coverage.

82% prefer to buy a simple, low cost insurance plan first, and make the financial plan later.

72% are willing to learn about the basic facts of insurance on your own at an educational website. 28% prefer to see an insurance adviser.

68% prefer to invest in a flexible, long term saving plan that gives an attractive return. 20% prefer to save in a life insurance policy with fixed premium and benefit. 12%

75% prefer an unbundled contract, with protection and saving purchased separately. 25% prefer a bundled contract.

48% prefer to buy insurance directly, if they can get a discount. 37% prefer to approach an insurance agent for a discount. 15% will help their friend to meet hte sales quota (ie no discount).

Buy term assurance to protect your family

There was a story in the newspaper about a widow with young children. Her husband passed away, and left her with financial liabilities to settle. Later, she became an insurance adviser, and used her example to advocate that all families should be adequately protected.

I agree.

Here are some options for a person age 30 to secure an life insurance protection of $200,000:

- whole life policy $3,000 - $6,000 a year
- term assurance policy $800 (male) $560 (female) a year
- decreasing term assurance $320 (male), $240 (female)a year

When you meet your insurance adviser, you should ask for the three options. You can find that life insurance cover (especially with a decreasing term assurance) can be quite affordable.

IF you can afford to save more, you can consider a whole life policy - which gives you a cash value.

More people now opt to buy a decreasing term assurance and invest the difference in an investment-linked fund.

Make the right choice. Learn about insurance through this educational website:

www.KnowYourInsurance.com.sg

Q&A on medical insurance

1. I am currently insured under MediShield and my company's medical insurance. Do I need to purchase additional insurance? If there is a claim, would I be able to claim under all three?

Reply: If you are covered under several medical insurance plans, you can decide on which plans to make your claim. However, the total amount that you can claim should not exceed the actual amount that you have paid. You are not allowed to make a profit by going to hospital.

Generally, if your company already cover you for medical benefits, you do not need to buy another other insurance plan.

However, many people still take Medishield (or Incomeshield) for the following reasons:

- to cover any excess payment that is not covered by the company's plan
- to have continuity of coverage if they leave their existing company.

As the premium for Medishield or Incomeshield is quite low, this approach is quite sensible.

2. Now that MediShield has been privatised, how will it affect my MediShield plan? Would I have to pay higher premiums?

Reply: The Basic Medishield plan remains with CPF board. Those who were covered for Medishield Plus have now been taken over by NTUC Income. We have renamed the scheme to Incomeshield M plans with benefits being enhanced and premiums lowered.

We will offer an option for these policyholders to move from the Incomeshield MA or MB plans to our more popular A or B plans. They will be contacted separately.

3. I went for a surgery recently and found out that my comprehensive medical insurance plan did not cover the X-rays. Why does it not cover the X-rays, which I would think as an essential part of the medical treatment?

Reply: Different insurers offer medical insurance plans with differing terms and conditions. Under Incomeshield plans, we cover x-ray expenses as part of the Room & Board charges.

4. I have elderly parents in their 70s who are in poor health. I am worried that my savings will be wiped out if both should fall in at the same time. What kind of medical insurance can I buy for them?

Reply: All medical insurance plans are underwritten based on latest health conditions. You can discuss with your insurance advisor before deciding on the best insurance plans for them.

If your parent are not insured, you can send them for treatment in Class C ward at government or restructured hospitals. There is a higher government subsidy for these wards. The cost is quite affordable, and the standard of care is quite good.

Many elderly people do not mind being treated in Class C ward, as they do not wish to incur a heavy medical bill.

5. What is "as charged plan" as compared to Incomeshield plan? Does Income offer an alternative to "as charged plan"?

Reply: The "as charged plan" pays the entire bill, but is still subject to the deductible and co-insurance of 10%. The premium is much higher than a similar plan with sub-limits for certain items.

If you go to a re-structured hospital, the bill will be within the sub-limits. There is no need to pay more for a "as charged" plan.

Incomeshield P plan allows insured to go to a private hospital. The benefit limits are 50% to 100% higher than Incomeshield Plan A and would be adequate for majority of private hospital bills.

6. Why should I purchase medical insurance from a cooperative and not a private insurer?

Reply: As NTUC Income is a co-operative, we do not aim to increase profit for shareholders. We actively manage claims to avoid escalation of cost. This allows us to keep the premium rates as low as possible.

Most private insurers aim to make a profit on their medical insurance. They will increase their premium rates to maintain their margin and generate profit for their shareholders. It is better to insure with a cooperative that aims to take care of its policyholders.

Buy Term Assurance

You can get a large life insurance cover, for a very low premium.

If you buy the term as part of an ILP, your policy will not lapse as the cash value from the ILP will pay the premium.

The premium for the term assurance can be kept level. For example, you can insure for $100,000 at age 30 for an annual premium of only $400 (male) or $280 (female). This is a level premium payable for 35 years. It does not increase with age.

You save 60% of the premium by selecting a decreasing term assurance (DTA), where the sum assured reduces gradually over the term. At age 30, the annual premium to cover a DTA of $100,000 for 35 years is only $157 (male) or $113 (female).

Many people need a larger amount of insurance when they are young. Their insurance need can reduce when they grow older, as they have accumulated savings.

Term assurance pays for death and permanent disability arising from all causes, i.e. accident, illness, etc. It provides wider coverage compared to accident insurance.

Crazy Horse Cabaret in Singapore

I POSTED THIS VIEW IN JUNE 2005. I THINK THAT MY POINT IS STILL RELEVANT.

------------------------------------

4 June 2005

So far, there is not much attention about the proposal to bring this cabaret to Singapore. But, I expect things to hot up later in the year. We can expect some Singaporeans to speak gainst this erotic show.

Some Singaporeans have a tendency to blow things out of proportion.

Look back 15 year. When the R(A) show was allowed in Singapore, there was a lot of discussion and hot air. Now, this matter is forgotten. It did not cause much harm anyway.

I think that history will repeat itself.

Handphone of accident can help

8 December 2005

Editor
New Paper

I refer to the letter, "How do we deal with drivers who lie?" by Mr Goh Ann Long (The New Paper, 7 December).

Mr Goh wanted to know how insurers deal with drivers who lie in their accident reports.

As NTUC Income insures about 40 per cent of all motor vehicles in Singapore, I wish to share our experience in dealing with such cases.

Each month, we handle about 2 000 cases of motor accident claims. About 10 per cent of these accidents are disputed by the parties, who give conflicting versions of the accident.

Our liability assessment officer interviews the parties, conducts a site visit if neccessary, and examines the photographs of the
damaged of the vehicle.

The officer is usually able to come to a decision on the appropriate apportionment of the liability. We try to be fair in our assessment and do not wish to favour any side.

If any of the parties disagrees with our assessment, they can ask for an independent expert to review the case or take the case to court.

The disputes can be minimised if both parties to the accident agree to sign the Singapore Accident Statement (SAS) on the spot.

We have recently implemented the use of MMS technology. Motorists are encouraged to use their handphones to take photos of the damage and send them to us by MMS at 9696 3399 or to photo@income.com.sg by e-mail.

The MMS project started two weeks ago.

We hope to solve 50 per cent of the disputed cases using this new approach. Claimants can call our 24-hour hotline at 6788 6616.

Tan Kin Lian
Chief Executive Officer
NTUC Income

New Paper: Electrician bullied me

9 December 2005

Editor
The New Paper

I refer to the letter by Ms Lynn Aw entitled, "Electrician bullied me" (TNP, 08 Dec 2005).

Ms Aw shared her unfortunate experience with an electrician engaged by her to fix her faulty toilet light. She found the contractor through an advertisement in the newspaper.

NTUC Income provides an alternative way for home-owners to engage a contractor. They can call our 24-hour Home Service hotline, 6788 8878. We serve our policyholders and members of the public.

Under our Home Service portal, we register reliable contractors who can provide a wide range of 40 different types of services. The most popular services are plumbing, electrical, refrigeration, air-conditioning and tuition.

We check that the registered contactors are licensed and have undergone the required training for the service that they have provided. They are also required to commit to deliver deliver quality and professional service at a reasonable price, and to provide a 90-day warranty on the work.

If the customer finds the service to be unsatisfactory, they can lodge a complaint to us. We will investigate the complaint and find a solution. The complaint rate is low, representing less than 1% of the cases handled through our portal. Most of these complaint are resolved at the first level.

We handle an aveage of 150 calls a day for various servics through our portal. More information can be found at our website: www.income.coop/homeservices or by calling 6788 8878.

Tan Soon Heng
General Manager
NTUC Income

Q&A: Financial Planning for the Young

Question: Should young adults think about financial planning, when their earning is still low?

Yes. Each person should save at least 10% of their earnings. This is very important, as jobs are uncertain. They may also need their saving to meet an unexpected payment, including a large medical bill, or when they lose their job.

Question: How should they invest their saving?

They should invest in a flexible saving plan that can give an attractive rate of return over several years. An investment-linked plan from NTUC Income is probably the best. It is more appropriate than a bank account or a traditional life insurance plan.

Question: Does this plan have high charges?

Most investment-linked plans have high charges. But you can choose a plan that invest 100% of your monthly savings immediately, and incur low charges.

Question: Does this plan provide insurance protection?

It is better for you to buy a decreasing term assurance. It provides high coverage at a low premium that remains fixed during the term.

Q&A: How to select an investment fund

Question: There are many funds in the market. What are the main categories of funds?

You can choose an equity fund, a bond fund or a balanced fund, which invest in both asset types.

Over the past 10 years, a global equity fund earn an average of 10% per annum. The bond fund earn an average of 5% per annum. These averages are also reflective of the returns over a longer period.

Question: Is it risky to invest in equities?

Equities have higher risk than bonds. But the risk can be reduced through diversification. You should invest in a fund that invest in many equities. If any investment turns bad, the impact on the fund is small, and can be offset by the good investments.

If you invest for the long term, you are also able to diversify through the years. Your fund may perform well in some years and poorly in other years. But, over a long period, it is likely to give you a fairly attractive return.

Question: Is there a guarantee on my capital?

If you wish to have a guarantee, you should invest in government bonds that has the highest rating. However, the return is quite low at around 3% p.a. for 5 years.

It is better to invest in an large, well diversified fund that can give a better return, with minimal risk, over a longer period.

Question: Am I committed to invest for a fixed number of years?

You have the flexibility to choose the right time to realise your investments. If you choose a good time, you can turn risk to your advantage and realise a better return than average.

You are also allowed to realise your investment, if you need cash for other purpose without suffering any penalty (except for the termination charge in some case). You get the net asset value fo the fund.

Question: Do I have to incur high charges?

You have to check the initial, annual and termination charges on the fund. Some fund have low charges, and give a better return to the investor.

No claim discount for health insurance

SUGGESTION FROM POLICYHOLDER:

I hope one day NTUC will also offer NCD for all its health products (there
is one in the industry that offers up to 30% NCD at this moment), which will
reward those people that maintain their good health. This is for sharing
only...

-------------------------------

MY REPLY:

We now offer 10% discount under Incomeshield if there is no claim for 3 years. We hope to be able to maintain this discount in the future, provided that our claim experience remain favourable.

I want you to know why the scale of NCD for motor insurance is different from health insurance.

In motor insurance, we have a claim rate of 20%. In Incomeshield, the claim rate is about 5%.

Due to the difference in claim rate, the NCD has to be reflected differently. Generally, if the claim rate is higher, it is possible to justify a higher rate of NCD to different between the good risk and the poor risk.

Positive feedback from our policyholder

FEEDBACK FROM POLICYHOLDER TO OUR ADVISER:

Dear

We am very fortunate and privilege to know you. You have been providing an excellent and effective services over almost a decade. You understand your products and can communicate effectively. This had helped me to make my choice as I compare with your competition.

NTUC Income's vehicle insurance differential itself from the competition with NCD waiver for car insurance as an example.

I learned from this experience that the upper management in NTUC Income are extremely active and effective to resolve matters.. and it is a rare find.

I must also add that your customer service folks are also great in processing my car insurance renewal with Income, ahead of the usual due date to accommodate for my absence in Singapore in Dec, as I had mentioned in my earlier email.

Congratulation on your success and attainment of LIFE MEMBERSHIP for MDRT. May I you have an enjoyable congress in San Diego. If you got time, visit the Sea World and Wild Animal Park...

Tips for motorists

Tips for motorists

1. Motor insurance.

Shop around for your insurance. You can save up to
$200 a year, if you buy from the right place.

Call 6477 7722 for a quote. We insure about 40% of all vehicles,
due to our competitive rates and good service.

2. Accident

Use your mobilephone or camera to take photos of the
damages. It helps to identify the party at fault and prevent
the other party from inflating the damages.

Send your vehicle to an assessment center (Idac)
immediately. Let your insurer handle the repair. You
enjoy expert and hassle free service.

Call 6788 6616 for assistance (if you are insured
with NTUC Incoem).

3. No Claim Discount

If the damages are slight, make a private settlement, i.e.
pay cash for the damage. You can protect your discount
and enjoy savings over the next few years.

If you are not at fault, your insurer will help you to make
the claim against the other party and allow you to keep
the discount.

Website: Know Your Insurance

This website aims to:

- educate people about investment and insurance
- help them to make the right choice
- offers a discount when they decide to buy direct.

Try it: www.KnowYourInsurance.com.sg

IT IS NOW READY FOR ACCESS!

Educational Talks

NTUC Income organises educational talks about insurance and investments.

We aim to educate consumers, so that they can make the right choice.

The talks are free, but you have to register your attendance at our website: www.income.coop/talks or call 6877 3366.

You will see a list of talks scheduled for the next few weeks, ie title of talk, date, time, venue.

An attractive offer will be given at each educational talk. You can benefit by attending. Several of the talks are given by our chief executive officer or senior managers.

Compliment on good service

MESSAGE FROM a policyholder

Hi Mr. Tan Kin Lian (CEO of NTUC),

I have read the numerous response/letters in the ST Forum coming from NTUC. It is rare that a CEO of an organization respond to public queries. You have always make it a point to ensure that the public queries are answered.

Below is a chain of e-mail that reflects how quick and responsive your folks reply to a customer request, even though the customer (me) has indicated that 15th Dec is still alright.

It is something that you should know, that the good effort of your folks is being
recognized.

If they went out of the normal procedure to assist the customer, I hope that they are not being reprimanded.

The intent of this letter is a feedback to you form a satisfied customer and a way that the NTUC staff be recognized for the good service.

The feedback phone call which normally comes few days after the service request has been made, showed the effort an organization is willing to put in, to improve its service.

Thank you for having such a team of people. The time taken to write this letter is deserving. I do hope to hear from your good self, so I know that the letter has reached you.

Offer of refund to annuitants

5 December 2005

Editor
Forum Page
Straits Times

I wish to respond to two recent stories in the Straits Times about the buyback offer offered by NTUC Income to 12,000 purchasers who bought their annuities prior to 2002 (? November and 3 December).

Both stories indicate that the refund offer is not attractive as the deal that they are getting now. This is correct.

The interest rate of 4.5 percent that is used to compute the refund is based on the actual yield earned by our investments during the past 10 years. This is lower than the guaranteed return of 5 per cent that was used to compute the annuity payments.

A small number from this group of annuitants were unhappy that they did not get any bonus for the past three years. We decided to make this refund offer, so that they can find a better way to invest their money.

Less than 10 people took up the offer of the refund. The majority decide to stay with their current annuity plan. For others who need a longer time to decide, our offer is still available for them for a few more weeks.

We sent an explanatory note to our 28,000 annuitants to explain our practice in declaring bonus. This supplements the communication that was sent in past years.

During the past two weeks, we also held two dialogue sessions that were attended by 600 people. The sessions went on well. Several annuitants were interested to top up their annuity.

NTUC Income is a cooperative society. We collect the annuity money and invest them into an annuity fund. We invest the fund prudently to earn an attractive long term return. We use the surplus of the annuity fund to declare bonuses to our annuitants. We exercise fairness in declaring the bonus to the different series of annuitants who have bought their annuities on different guaranteed terms.

We will continue to hold dialogue sessions in the future. We invite the public to attend these sessions and learn more about the principle of pooling is applied to help annuitants to manage their risks. We want to educate retirees about the advantages of investing in annuities.

Tan Kin Lian
Chief Executive Officer
NTUC Income

Reply to Chia Yoong Song on Incomeshield M

4 December 2005

Editor
Forum Page
Straits Times

I refer to the article "Host of errors in policy documents Incomeshield Plans MA, MB" by Chia Yoong Song (Straits Times, 3 December).

Mr Chia insured his wife under our Incomeshield Plan A. He and his two children were insured under Medishield Plus, which was recently converted to our Incomeshield Plan MA.

When we selected his wife's record to print the renewal notice in November, we accidentally linked it to Mr Chia's policy number under the Medishield Plus. This resulted in a printing error and caused the duplicated printing. When we spotted the error, we sent a new set of renewal notice fo his wife, to supercede the renewal notice.

We apologise for the error and inconvenience caused to Mr Chia. This error has now been rectified.

On a positive note, we now have a large base of 800,000 policyholders under our Incomeshield plan. With the economy of scale, we will be able to improve our insurance plans over time. Our aim is to provide adequate coverage for a lifetime and keep the premium at an affordable cost for our policyholders.

Tan Kin Lian
Chief Executive Officer
NTUC Income

Policyholder have second thoughts about going to distributor workshop

I RECIEVED THIS MESSAGE FROM A POLICYHOLDER (IT HAS BEEN EDITED BY ME)

Dear Tan,

Your blog is extremely educational. I discovered it by accident following a search for your full name.

Like many people, I did not know earlier that there can be a significant difference between a distributor's cost of repair versus your authorised workshop.

After reading your blog, I have now become aware that it can make sense to get value for money by repairing at normal workshop, especially if the distributor is also sub-contracting work out.

I have reconsider my plan to go to my distributor workshop for the spraying. I will go to a normal workshop.

Thanks for every thing. Most importantly, the education that you have provided to the general public. I know I can trust your views.

Financial Planning: Tips for the Young

1. Save up to 15% of your monthly income. You may need you savings for an emergency or when you lose your job. Invest the savings in a flexible insurance plan that gives an attractive return.

2. Buy a low cost insurance plan that offers up to $100,000 in coverage against death, accident and hospital expenses for only $100 a year. Accidents can happen and you should be protected.

3. Learn the basic facts about investments and insurance on your own. You can make the right choice and earn a better return for your savings. Visit this website: www.KnowYourInsurance.com.sg or attend an educational talk (call: 6877 3366).

CONTEST

Visit this website: www.income.coop to participate in this contest and win prizes of $5,000.Eligible only for people between 20 to 30 years old. (Note: this will only be available from 15 Dec 2005).

Financial Planning: Tips for Young Parents

1. Save up to $200 monthly for your child. Invest the savings in a flexible insurance plan that gives an attractive return. The savings can be used for your tertiary education or give your child a head start in life.

2. Choose a plan that gives you an attractive return and invest 100% of your savings from the first month. Protect your savings with a decreasing term assurance that charges a very low premium, and allow more of your savings to accumulate.

3. Learn the basic facts about investments and insurance on your own. You can make the right choice and earn a better return for your savings. Visit this website: www.KnowYourInsurance.com.sg or attend an educational talk (call: 6877 3366).

CONTEST

Visit this website: www.income.coop to participate in this contest and win prizes of $5,000. Eligible only for people expecting a child or with a child less than 2 years old. (Note: this will only be available from 15 Dec 2005).

My personal views on the Melvyn Tan's eposide

Melvyn Tan is a world renowned pianist. He is a Singaprean.

When Melvyn was young, he went overseas to study. He did not return to perform his national service. His parents paid a bond of $30,000. It was a large sum of money at that time.

Many many years later, Melvyn Tan achieved world fame. He agreed to return to Singapore to perform at the Esplanade, Theatre by the Bay.

He voluntarily attended court to face the charge of failing to do his national service. He was fined $3,000.

Some Singaporeans were still not happy. They wrote strong letters to the newspapers. There was an uproar.

Finally, Melvyn Tan decided to cancel his performance at the Esplanade.

I like to ask the following questions:

- what have we achieved as a result of this uproar?
- how may times should a person be penalised for an offence?
- was the penalty of $30,000 on the bond sufficient?
- can we be a more forgiving people?
- do we want Melvyn to stay away from Singapore for a lifetime?

Dialogue with annuitants

I held a dialogue with our annuitants. 400 people attended.

We discussed the various series of annuities issued by NTUC Income during the past years. There was a lively Q&A session. It went well.

I told the annuitants about how the annuity pool works. All of the annuity investments are put into a pool. We invest the pool prodently to earn a fairly attractive return. Most of the surplus are used to declare bonus to the annuitants.

When we declare the bonus, our aim is to be fair to all parties. Annuitants who bought the annuity earlier and enjoyed a higher guaranteed return, will earn a lower rate of bonus. The annuitants who enjoy a lower rate of guranteed return, will enjoy a higher rate of bonus.

Our aim is to be fair to all the annuitants. We do not want to favour any group of annuitants at the expense of another group. This is the concept of pooling of risks.

The annuitants generally appreciate that we have done our best to be fair to all annuitants, and to give the best possible return to them.

The dialogue went well. It was also attended by journalists from two papers. I hope that they will cover the event.

Tip: save 10% of your monthly salary

The training manager of a large company told me that they have 5,000 employees, who earn an average of $1,500 a month. Most of them do not have any savings. They spend all of their earnings.

What is my advice for them?

Here is my reply.

- Save 10% of your monthly earnings
- You may need the savings in an emergency, eg loss of job or pay medical bill
- Do not buy a life insurance plan - it penalise you when you take out the savings
- Invest in a flexible plan, such as the Ideal plan from NTUC Income
- 100% of your savings is invested from the first month
- you can earn an attractive return, ie better than bank deposit

The training manager was convinced. He wanted to arrange for his employees to attend my educational talk.

We give 26% discount for off-peak car

Editor
Forum page
Straits Times

Insurance premiums for off-peak cars are too high. Time to lower them

I refer to the letter written by Mr Winston Ng, "Insurance premiums for off-peak cars are too high..." (St Times Online, 19 Nov 2005).

Mr Ng felt that insurance premiums for off-peak are cars too high. He said that these cars spend less time on the road, contribute to less accidents and should enjoy a lower rate of premium.

We agree. In fact, NTUC Income now offers a discount of 26% to off-peak car owners.

NTUC Income insures nearly 40% of all cars in Singapore. We are able to use our large base of insured vehicles to calculate a fair premium rate for each category of risks, based on their actual claim experience. Our discount for off-peak cars is based on the actual claim experience for this category.

NTUC Income now insures 5,300 off-peak cars. This represents about 50% of the 11,000 off-peak cars in Singapore.

We are able to offer competitive premium rates because of our pro-active management of claims and satisfactory service. Generally, our premiums are about 10% lower than the market. The additional discount of 26% for off-peak cars make us even more attractive to this class of owners.

Tan Kin Lian
Chief Executive Officer
NTUC Income

Your comments are now welcomed

I now allow visitors to posting comments into my blog. You can also give feedback directly to me at tankl@income.com.sg.

I have found a way to stop spamming by using the "comment moderation" feature of this blog.

Tan Kin Lian

How NTUC Income reduce our repair cost

Editor
Forum Page
Straits Times

I refer to the letter from Sam Yeow entitled "It cost more to use insurer's outlet" (St Times, 19 Nov 2005).

Mr Yeow said that insurers who insist that repairs be done at their authorised workshop may pay more for their repair. He quoted his own case, where he could arrange his own repair for $300, but his insurer eventually paid $3,580 for the same repair done at its authorised workshop.

I agree with Mr Yeow. This is a common situation and result in higher repair cost and higher premiums.

NTUC Income does not use the method described by Mr Yeow. We adopt a multi-faced approach to reduce the repair cost, as follows:

- If the damages are slight, we encourage our policyholder to pay for his own repair, and protect the No Claim Discount. The saving in premium, due to the discount, can be more than the repair cost.

- Alternatively, we are willing to offer a cash settlement for the policyholder to arrange his own repair. The policyholder can find a workshop to repair for less, and keep the difference.

- If we have to pay for the repairs, we will invite our quality workshops to tender for the repair, and observe our quality standard. In this situation, the workshop will not submit an inflated bill as the repair will not be awarded to them.

We have implemented the above approach quite successfully over the past few years. This has allowed us to reduce our repair cost and offer competitive premiums to our policyholders. Our premiums are about 10 percent lower than the market.

Tan Kin Lian
Chief Executive Officer
NTUC Income

NTUC Income has the best call center in Singapore

NTUC Income has the best call center in Singapore.

On 18 Novemeber, we received the award of the best call center in Singapore. We won against the call centers operated by the telephone companies, banks and other large organisations.

Our subsidary, Call Center One (which offers outsourced call center service to other business organisations) also received the top award in its category.

Why?

If you call our hotline 6788 6616 at any time (24 hours X 7 days), you are answered promptly by a human voice. You do not have to wait or interact with a voice recording machine.

You get personal attention immediately.

And there are many other reasons!

Motor premium does not depend on value of car

ISSUE:

A motor policyholder asked why his renewal premium was not reduced according to the depreciation in value of his car. He cited that other insurance companies also practice the same thing.

-------------

MY REPLY:

You have taken the right approach, which is to find out the most competitive premium rates from a few insurers.

Each insurer will have to decide on what is its appropriate premium rate, taking the relevant factors into account. I hope that you find our premium rate to be competitive and our service to be satisfactory, and will renew with us.

We are not able to reduce the premium rate based on your argument. Please allow us to practice what is practical for us.

-------------

POLICYHOLDER'S REPLY:

Dear Mr Tan,

Probably you're the only CEO of a prominent organisation who always pay attention to small issues. And easily accessible by common people like me. I appreciate that.

From your email, I have a perception that once a premium reach its lower threshold, then other factors outside the insured parameters (such as; insurer's operational and indemnity cost) will play a significant role.

Frankly speaking, I still found that NTUC Income i! s still the most competitive among those big players in motor insuranc e.

I did have good experience with Income in the past, no doubt about it.

NTUC Income gives a better return than other insurers

A policyholder was unhappy that his return was lower than the illustration made at the time that the policy was sold 15 years ago.

My manager gave her explanation (reply 1). I followed up with a further explanation (reply 2).

-----------------------
REPLY 1 (FROM MANAGER)

You have bought our endowment policy in 1990. The illustrated maturity figure was based on the bonus rates at that time, and on the high return from our investments.

However, for years 1997, 2001 and 2002, we were forced to cut our bonus due to difficult market conditions. For 2003 and 2004, we have done better and have reflected this by restoring partially the bonus cuts in the earlier years. The bonus rates for Year 2004 is about 83% higher than for 2002.

Your policy matured this year. The average yield works out to be 5.91% per annum. This is considered very good. If you have set aside the same yearly amount with a bank over the same period, you would have received much lesser.

Our terminal bonus of 25% is a generous amount. Even in our bad years, we have dipped into our reserves to maintain this. We do so because we do not want policyholders with matured policies to forfeit this due to a few years of poor results.

We have given you a good and fair return on your insurance policy. You cannot compare this with equities. They are totally different classes of products.

-------------------

REPLY 2 (FROM CEO)

I confirm that you have obtained a fairly attractive return. If you have insured with another insurance company, your return would have been much lower.

My manager will send you a letter written by another policyholder, printed in the Straits Times, where she complained about the poor return from another insurance company. She said that the return from NTUC Income was much better.

I hope that you will, after reading this letter, send us your appreciation for the good return that we have given to you, during the past years, when the investment climate has been quite difficult.

If NTUC Income is not a cooperative, will it behave differently?

A visitor sent the following questions to me, about cooperatives in Singapore. Here are the questions and my reply.

COMMENT BY VISITOR

Visited your blog earlier and indeed the commentaries there have been very informative. I’m not sure it is appropriate to ask you to comment on co-operatives in Singapore (NTUC Income, I believe, is the largest). But I would be grateful if you could share your enlightened views on

A) The general status of cooperatives in Singapore:

Reply: A few cooperatives have large operations and are doing well in Singapore.

For example, NTUC Fairprice runs a large and successful chain of supermarkets. They commend a large market share and are able to bring the prices down for consumers.

NTUC Income runs a large insurance operation and serves 2 million people. With our large market share, we are able to provide insurance coverage at low and affordable premium.

B) Would NTUC Income be significantly different if it were not constituted as a cooperative?

Reply: Yes, NTUC Income will be significantly different, if we were not constituted as a cooperative.

We would be charging higher premiums, to increase profit for shareholders. We would also find reasons to challenge claims and avoid paying them, also to increase profits. These are the reasons why I do not want NTUC Income to be profit driven.

C) How would you see cooperatives heading in the future (such as more cooperatives competing against each other)?

Reply: I wish to see more cooperatives making a big impact in the future. I hope that they will form a larger market share than today.

If more cooperatives are formed, there is the risk that they might compete against each other. This does not really matter.

In practice, they are likely to target different segments of members, so the risk of competition and conflict is small. Even if there is competition, the conflict should be minimal, as all cooperatives follow the same cooperative principles

A human voice answer your call

9 November 2005

Editor
Forum Page
Straits Times

I refer to the article "Readers air grouses with banks" (ST, 8 November 2005). Several of your readers expressed their unhappiness with automated telephone answering services from banks.

I wish to share our experience in operating our call center for the past 20 years.

NTUC Income is a large insurance cooperative serving 1.8 million policyholders. We handle an average of 300,000 inbound and outbound calls each month. Our call center operate 24 hour a day, seven days a week.

Over the years, we took a conscious decision not to place an answering system between our policyholders and our call center officers. We allow the policyholders to reach our officers directly and be served immediately, with minimal hassle. Callers are greeted warmly with a human voice instead of a recorded message.

Our policyholders can make enquiries or handle transactions through our call center. We have recently introduced separate hotline numbers so that our policyholders can be answered immediately in the language of their choice, namely English, Mandarin and Malay.

We are able to provide to achieve a high level of productivity of our call center officers through a good employee training and retention program. We introduced an escalation system that allows difficult issues to be escalated to the supervisors and experts. This reduce the stress on our call center officers and create a more conducive working environment. Our turnover rate is about half of the average for the call center industry.

We are able to provide friendly service at an economical cost, despite the higher wage level in Singapore. Our call centre operation is entirely based in Singapore. We believe that our policyholders will be better served by call center officers with local knowledge.

We strive for excellence in customer service and delight our customers with fast, effective and reliable service. We will be happy to share the experience of our call center with other business organisations and help to build a high standard of service quality in Singapore.

Tan Kin Lian
Chief Executive Officer
NTUC Income

Fixed the price of land for the integrated resort

I agree with the decision of the government to fix the price of land for the integrated resort.

Here are my reasons:

- the government is in a better position to determine what is the fair market value for the land.

- it avoids excessive speculation on the price of land

- the choice of the winner will be based on the design concept and other factors.

I hope that this principle will apply to other areas of pricing, including:

- certificate (COE) for ownership of vehicles

- land for public and private housing

Four decades ago, the government fixed the price of HDB flats and shops. This allowed the services to be provided at a low cost and keep the cost of living low. This was a period when the Singapore economy grew well.

When the government decided to let the market forces determine the prices, it caused the prices to escalate (due mainly to excessive speculation). This has resulted in a high cost of living in Singapore.

We can move back to the good old days where the prices are determined by the government (with access to professional valuers). This approach can allow the prices that reflect the market, but avoid excessive speculation.

Tan Kin Lian
(in my personal capacity)

MHS (managed care) policyholder ask for clarification

FROM MHS POLICYHOLDER

Thank you very much, Mr Tan, for your time and advice. Really appreciate the fact that as CEO, you take the trouble to address my concerns.

---------------------------------------------------------------

PREVIOUS ENQUIRY:

I'm however confused about the recent policy changes with regards to Medishield and my current status. I was not under medishield after I retired because I continued with MHS.

1) Is the MHS considered an enhanced plan or a Medisave-approved private integrated plan? If so, am I automatically also covered under medishield, in addition to my MHS? Does that mean, I now have a basic medishield plus MHS?

Reply: You only have MHS. You have the option from NTUC Income to move to Incomeshield at any time in the future. You are NOT covered under Medishield - as you have been excluded from it. With MHS, you already get more coverage than Medishield, so there is no need for you to buy Medishield and waste money.

2) If I am now only covered under MHS, is it advisible to opt in for the basic medishield ( I understand that the govt is encouraging us to do so). Or am I by default opted in already after the new policy change?!

Reply: Yes, if you wish to give up MHS (due to its high cost), you can opt for Incomeshield (and not basic Medishield). Incomeshield covers everything that Medishield covers and more than that. What the government has done is to require the insurer to "re-insure a portion of their shield back to CPF". This is a matter to be sorted out between us and CPF and should not concern you.

2) Yes, I agree with you that the premium is rather high for MHS for a retiree like myself. For this reason, can't I use Mesisave to pay for thepremium? With the liberaliation and privatisation of Medishield plans, it is a step backward (and frustrating) to realise that I cannot utilise my own funds to protect myself during the time I need it most.

Reply: You can use Medisave to pay for Incomeshield, but not MHS (from 2007). This is the decision of the government. They have their reason. Let us accept it.

Reverse Mortgage for retirees

QUESTION FROM JOURNALIST"

Dear Mr Tan,

I am writing a feature article on home equity. 47 per cent of total assets in the household sector are invested in residential properties.

1) Can you tell me more about Income's proposal for a reverse mortage plan that will suit HDB flat owners?

2) What are the main obstacles to Singaporeans monetising their assets, namely their HDB flats? What would you say are the best ways to overcome these obstacles?

---------------------------------------------------------

REPLY:

At present, HDB does not allow its flats to be used for reverse mortgage. This is the main obstacle. If HDB relax on this rule, some owners may wish to use their HDB flat to get a reverse mortgage.

You have to ask HDB for their reason to impose this rule. It has been the rule for many years. HDB is not prepared to relax this rule up to now.

If HDB relax its rule, the financier will still have to address the following obstalces:

- how much should be granted as a monthly income?
- what interest rate to charge?
- how long to grant the loan?
- what happens when the property value drops below the borrowings plus interest?
- should the scheme be insured, ie guarantee payment of the income for the lifetime of the mortgagee?
- who owns the residential interest in the property at the time of death of the mortgagee?

The reverse mortgage offered by NTUC Income is an "uninsured" mortgage. It works as follows:

- we agree on a monthly payment to the mortgagee
- interest is charged at the current rate (around 4-5% per annum)
- so long as the total borrowings, with interest, does not exceed 80% of the value of the property (ie the 20% is to be a buffer), we will contiue the arrangement
- when the total borrowings reach 80% of the value of the property, we ask the mortgagee to make other arrangements, eg to sell the property and repay the loan
- if a small amount is taken out monthly, the arrangement is likely to continue for 20 years or longer
- when they sell the property, they repay the loan and keep the balance.
- if they die, the property is sold, and the balance of the property, after repaying the loan and interest, will go back to the estate.

In practice, we believe that many mortgagees are likely to sell their property after 5 or 10 years and to repay their loan. They can find another place to stay, eg rent a flat, stay with their children, or stay in a home for the elderly.

We also give an option for the mortgagee to allow a family member, eg son or daughter, to take over the property and the loan.

-----------------------------------------------------------

Here are some examples of the amount that can be drawn down:

- Non-insured, fixed period loan (20 years)
- All flat owners (fully paid up) over age 70 are eligible
- Interest rate 5% fixed
- Sample monthly drawdown amount (0.2% of initial property value)

Flat type   Property       Monthly     
            Value           Drawdown
   
3-room      $160,000       $320   
4-room      $240,000       $480   
5-room      $320,000       $640    
Exec Apt    $480,000       $960   

- Borrowers can continue to stay in flat
- Early repayment and downgranding to smaller flat allowed (repay loan)

Direct Discount for Motor Insurance

FROM STRAITS TIMES JOURANALIST:

QUESTION:

I understand Income is offering 5-10% loyalty discounts, as well as 10% discount if customers come direct to you (bypassing broker).

How has the promotion been in terms of success so far? What is your exact market share this year, compared with last year?

-------------------------

REPLY:

We offer a discount of 10% for a motorist who register with us and take the motor insurance directly with us, i.e they do not go through an insurance agent.

This direct discount of 10% incorporates the loyalty discount of 5% or 10%. The "direct" motorist receive a total discount of 10%, inclusive of the loyalty discount of 5% which is given to a motorist who stays with us for 3 years and 10% for 7 years or longer.

We have received extremely good response for the direct channel.

The number of direct motorists increased from 15,200 at the beginning of 2005 to 21,800 now. It now represents 14% of all motor cars insured with us. The other 86% are brought in by our insurance agents.

Earlier this year, an average of 300 cars insured directly each month. After the introduction of the 10% discount, the number than insure directly has increased by more than 3 times. In September, 1,100 motorists insure their cars directly with us.

We also offer the same 10% discount for motor cycles and commercial vehicles that insure directly. They also received good response. I do not have the figures for these two category of vehicles that are insured directly with us.

We believe that more motorists will choose to insure directly with us in the future. We have a network of seven branches located all over Singapore. They can also call us directly over the telephone. We will arrange for the policy document to be sent to their home for a small administration fee of $5.

The 10% discount represents an average saving of $80, based on an average premium of $800 for a motor car. If the premium is higher, the saving is more substantial.

Our market share of motor insurance has dropped from 42% last year to 39% now. This drop of 3% is contributed by the following factors:

- a few insurers have aggressively reduced their premium rates to match or go below our competitive rates.

- many people are scrapped their old cars to buy new cars this year due to the low COE. They are compelled to insure with another insurer through a tied arrangement with the distributors for the first year.

- some insurance agents diverted the motor insurance to other insurers, as they are unhappy with our direct channel.

We are confident that our market share will increase next year for the following reasons:

- many motorists who bought new cars will come to us when they renew their insurance on the second year

- our competitors will not be able to sustain the low premium rates, as they have not been able to manage their repair cost effectively.

- more people will come to us to enjoy the 10% discount

Our special discount of 10% for motorists who insure directly will apply up to the end of this year only. We may reduce the direct discount to 5% from next year.

To enjoy this 10% discount, the motorists can call our hotline now, and register with us before th end of this year.

Tan Kin Lian
CEO, NTUC Income

MHS provides better coverage than Medishield

QUESTION FROM A POLICYHOLDER

Dear Mr. Tan,

I'm 65 this year and presently insured under the HMS. Recently, there are some drastic changes in the Medishield polcies.

My understanding is that I am not protected under the Medishied because of MHS. That was before the changes.

As of Jul 2005, private insurers have launched their medical insurance plans as enhancement plans to the reformed MediShield. Does that mean I will automatically become a medishield policyholder and enjoy the benefits on top of MHS?

If I'm presently only with MHS, am I taking a great risk not opting for Medishield? Or should I sign up for incomeshield and MHS to be safe? But that would be a burden financially because I'm retired.

----------------------------

REPLY

Dear

You do not need to be worried.

The MHS provides a more comprehensive coverage compared to Medishield. It covers medical treatment at the GP, specialist and hospital. It has a co-payment of only 10% and pays from the first dollar (ie no deductible). So a higher percentage of the hospital bill is covered under MHS.

The only disadvantage of MHS is that it can be quite costly when you get older. If you find the premium to be too expensive, you can opt to be converted to Incomeshield, which covers hospital treatment, and is subject to a deductible and co-payment of 15%. This coverage is still better than Medishield.

You do not need to be worried about your coverage, as it is much better than Medishield.

Tan Kin Lian
CEO, NTUC Income

Investing the annuity pool

Dear Mr. Tan,

I think it is great that you make such an effort to communicate with your customers and potential customers. I have just been reading your blog...

I understand that the money for a particular annuity series is put into an insurance pool, which is then invested. What I'd like to do is to understand the nature of the investments.

QUESTIONS:

1. Do you buy and hold bonds in your investment pool? What kinds? If so, what is the duration of the portfolio generally (i.e. just to get an idea of how
often the bonds turnover)?

Reply: we invest about 65% in bond and fixed income investment, and 35% in equity and property investments. The duration of the bond is between 3 to 7 years. We like to have longer duration. We tend to keep the bond for the longer term, and avoid active trading.

2. If there is a general shift in interest rates, how long before this
rise shows up in returns (bonuses) to policy holders?

Reply: If there is a shift in interest rate, we expect to see a higher yield on the reinvestment of our bonds. If there is an increase in interest rate, we expect the yield to increase gradually over the next few years.

3. I understand that there may be an upfront load/fee. What are the recurring ones? i.e. your cut of the returns from the investments.

Reply: Our expense of investment is about 0.5%. This is a reduction from the gross yield.

4. How often do you start a new series on average?

Reply: We introduced a new series due to the severe drop in interest rate. Our current series of annuity is priced at 2.5% per annum.We expect to keep this series for several years. If we earn a higher return, we will pay a higher bonus.

Are you getting better repair when you pay more?

ADVICE TO MOTORISTS

Some owners insist on getting their cars repaired by the distributor's workshop. They think that the quality of repair is better.

On average, the distributor's workshop charged 2 times of the price of repairs carried outside.

We investigated on how several distributors carry out the repair. Do they provide better quality?

Our finding? Many of the distributors outsource the repairs to external independent workshops. They charge the full price for the parts and add 35% on the bill of the external workshops.

If you (the owner) go to the external workshop directly, you can get a discount on the genuine parts and pay the market rate. You get the same quality of repair.

So, if you are paying for the servicing and repair of your car, you do not need to go to the distributor and pay so much more.

Tan Kin Lian
Chief Executive Officer
NTUC Income

Only 1% of repair affect the engine

We carried out a detailed analysis of 200 motor repairs arranged by us during a week.

Only 1% of the repairs affect the engine. Under our repair practice, we send these cases to the distributor as it involves the use of specialised equipment, that are available from the distributor.

5% of the repairs require "mounting of the engine" but not repair to the engine. This means that the engine has to be removed to allow repairs to be done to other damaged parts, and mounted back. This can be done by external workshop without any risk at all.

The remaining 95% do not affect the engine or mounting of the engine. They are usually on minor dents and replacement of exterior parts of the vehicle. They can be done by external workshops quite easily. Many of the people working in these external workshops had their experience working for the distributors previously.

Conclusion? You only need to pay a high price for 1% of repairs that has to be done by the distributor. For 99% of cases, you can go to an external workshop and enjoy up to 50% saving and get satisfactory quality of repair.

Tan Kin Lian
Chief Executive Officer
NTUC Income

Consumer should also act responsibly and fairly

24 October 2005

Editor
Online Forum
Straits Times

I refer to the letter from Lai Chong Seng entitled "Consumer protection law should also cover financial services" (ST Online, 21 Oct 2005).

NTUC Income supports the proposal to extend the consumer protection law to cover financial services.

We believe in offering products that are fair to consumers. We are a cooperative society and do not intend to make profit at the expense of our policyholders. We distribute most of our annual surplus to our policyholders, and distribute them fairly.

We believe that the law should also encourage consumers to act responsibly and not pursue their self-interest at the expense of business organisations.

I now wish to address the issues raised by Lai Chong Seng.

We have always made in clear in our communciation that non-guaranteed bonus could mean zero bonus in some bad years. In illustrating our bonus, we act responsibly in estimating the likely investment income in the future. Our illustration in 1996 reflect the global economic situation at that time.

Subsequently, the global economy went through several years of low interest rate environment. This has reduced the return on investments. Mr Lai was protected by the high guaranteed rate of return on his annuity. He has benefitted from his annuity contract.

It was made clear in our policy contract that the bonus is declared by the appointed actuary. In doing his work, the actuary has the duty to be look after the solvency of the insurance fund and the long term interest of all policyholders.

Each year, the actuary recommends to the board of directors on the rates of bonus to be declared for different series of policyholders, and ensures equitable treatment of all policyholders.

As this is a complex matter, it is not possible for the bonus declaration formula to be spelled out in the policy contract.

In 2001, we issued two new series of annuity contact to offer a lower guaranteed return. This was necessary to reflect the lower interest rate. The new series did not adversely affect the old annuity contracts, such as the annuity taken by Mr Lai.

Although the new annuitants enjoy a bonus during the last two years, they still receive a lower return compared to the high guaranteed return enjoyed by Mr Lai.

I understand that Mr Lai has raised this issue with us in the past. We have provided the explanation to him previously. He is still not convinced.

If Mr Lai still feels that he has been misled into buying the annuity contract, I wish to offer him a refund of his invested sum with interest at 4.5% per annum, less the annuity payments that he has received.

The proposed rate of 4.5% is the average net rate that was earned on our investments during the past 10 years. I shall also be making this offer to other annuitants who had bought the same series of annuity as Mr Lai.

Tan Kin Lian
CEO
NTUC Income

Use MMS to take picture of accident

USE MMS TO TAKE PICTURE OF ACCIDENT

NTUC Income has come out with an innovative way to help policyholders in their motor accident disputes through the use of MMS technology.

NTUC Income handles about 2000 accidents each month. About 10% of these cases involve disputes between the parties on the cause of the accident. The parties give conflicting versions in the accident in the accident report. This makes it difficult for the insurers of the vehicles to decide on the party that should pay for the damages.

Some motorist try to distort the fact of the accident so that they can avoid liability. They want to put the blame on the other party and keep their No Claim Discount.

To help our policyholders in these disputes , NTUC Income is starting a service to encourage them to send an MMS of the photos taken at the accident scene. Many motorists now carry a mobilephone that can take pictures and send them to us immediately by MMS.

Photos showing the position of the vehicles as well as the damages caused by the accident are useful in the investigation of accident liability. It will also prevent aggravation of damages after the accident to inflate the repair cost.

Our policyholder should also give other useful information like the third party claimant's contact as well as whether there are any injuries substained due to the accident.

The MMS can be sent to XXXX XXXX to be stored directly into our server. Alternatively, the motorist can download the photo into a computer and send them to us by e-mail at photo@income.com.sg. When the motorist call our 24 hour accident reporting center, our staff will tell them about how to send the MMS or e-mail.

We hope to solve 50% of the disputes through the use of this new initiative.

Tan Kin Lian
Chief Executive Officer
NTUC Income

You can buy the annuity between 55 and 62

22 October 2005

Editor
Forum Page
Straits Times

I refer to the letter "Buying annuity ? No need to rush, can wait till 61" by Mr Dennis Ng Kah Wan (ST, 20 Oct 2005)

Mr Ng said that in the current low interest environment, it is better to leave the CPF Minimum Sum in the retirement account to earn guaranteed interest of 4% per annum. There is no need to decide whether to convert the minimum sum into annuity at age 55.

I agree that the guaranteed interest paid by CPF is attractive. The retiree also has the choice to decide on buying the annuity at any time between 55 and 62. Many of them are aware about this choice, if they speak to our insurance adviser.

As stated in my previous letter, if $90,000 is used to buy a life annuity at age 55, we expect to pay a monthly sum of $543 from age 62, comprising of a guaranteed sum of $473 and an estimated bonus of $70. The bonus amount will depend on our investment yield in future years and is not guaranteed.

If the $90,000 were to be kept in CPF Retirement Account up to age 61 years and 11 months, the sum will grow to about $118,000. Using the sum to purchase an annuity then, the monthly payout from age 62 will only be $528. Based on this example, an earlier purchase of an annuity is a better decision.

I will let each retiree decide on whether it is better to buy the annuity earlier or later. If you buy the annuity later, you will have to take the risk that the plan may not be available at that time, or the terms may change.

For people who are interested to know more about the annuity plan, I suggest that they attend our educational seminar. I will be happy to make a presentation and to answer questions from the floor.

Tan Kin Lian
Chief Executive Officer
NTUC Income

Annuitants who did not receive a bonus in recent years

22 October 2005

Editor
Forum Page
Straits Times

I refer to the letters "Don't bank on bonuses to boost monthly payout" by Mdm Ng Lee Chin and "Why was no bonus declared?" by Chen Zhide and Chiang Bak Hoi (ST, 20 Oct 2005).

The three writers bought an annuity plan from NTUC Income. They were disappointed that they have did not receive any bonus during the past three years.

From the information gathered, the writers have invested in our earlier series of annuity policies.

NTUC Income started the participating annuity plan in 1993. They offered high guaranteed payout. For example, a male at 55 investing $90,000 was given a monthly payout of $765 per month. The annual payout amounts to 10.2% on the amount invested. This is a very attractive payout, considering the low interest rate environment
in recent years.

For this series, we used a guaranteed interest rate of 5% to compute the guaranteed payout, and pays a bonus if our average investment yield is higher than 5%.

The annuity is payable for a lifetime, which may stretch for 25 years or longer. In the event of early death, the annuity is payable for a minimum of 15 years.

As the average investment yield in recent years was less than 5%, this batch of annuitants did not receive any bonus. But, they did receive an attractive guaranteed payout which is more than can be obtained from other types of low risk investment today.

We introduced two new series for new purchasers. The series introduced in 2002 provided a lower guaranteed payout, computed on an assumed interest rate of 2.5% per annum. They will receive a bonus if the average investment yield is higher than 2.5%. This batch of annuitants have received a bonus of 0%, 2%, 2.5% during the past 3 years, or an average of 1.5% per year.

We have notified our annuitants on several occasions about our system of declaring bonus on their annuity plan.

We invited our annuitants to a dialogue session on 26 February 2005 for them to ask questions and seek clarification. About 100 annuitants attended. At the dialogue, the earlier batch of annuitants realised that they had a better payout than the later batches. The later batches of annuitants asked if they could be placed in the same footing as the earlier batches. We explained that this was not possible.

As an insurance cooperative, NTUC Income aims to act fairly in the interest of all policyholders, including annuitants. We declare most of our surplus to our policyholders, and invest their money prudently to safeguard their long term interest. We distribute the surplus fairly to all policyholders.

Tan Kin Lian
Chief Executive Officer
NTUC Income

Two ways to buy a life annuity with your CPF

A CPF member is required to keep $90,000 in the CPF to be withdrawn in monthly installments. He can buy a life annuity with this sum.

Here are two ways to buy the life annuity:

- buy at age 55, and receive the monthly payment from 62 years.
- keep in CPF to earn 4% per annum, and to buy the annuity at age 62

Which is better?

If you buy the annuity at age 55, we pay you a guaranteed interest of 2.5% and bonus that depends on the earnings of our insurance fund. Based on our past record, we expect the bonus to vary from 1% to 3%, but this is not guaranteed.

If you keep in the CPF, you will get a guaranteed return of 4% per annum, which is quite attractive. You can invest in the life annuity after age 62. The amount that you can get depends on your age, gender and the amount invested.

Generally, our life annuity gives a guaranteed return of 2.5% plus a bonus that depends on the earnings of our insurance fund. We also give a higher payout, as the capital sum is consumed during your lifetime.

Many people find it quite attractive to buy an annuity at age 55. The guaranteed return of 2.5% plus the bonus (assuming 2% per annum) will be better than keeping the money in CPF.

Pay an annuity to an injured person

Some people are injured in an accident. They are paid a lump sum as a compensation.

It is better for these victims to receive an annuity of $X a month for a certain number of years, or for a lifetime.

This ensures that the money is used for the purpose, ie medical and living expenses, and not used for other purpose, eg buy a property or speculate in investments.

Pay regularly using an annuity

Singaporeans donated $70,000 to the parent of the Nepalese twin (Gangga and Jammu) to take care of their expenses for 8 years. The parents claimed that they did not receive the money.

It would have been better if the money had been given to the parent in the form of a monthly annuity. The monthly payment could have been around $800. This will ensure that the money is used for the living expenses, and not used for other purpose.

A 8 year term annuity is suitable for this purpose. Technically, this is called an "annnuity certain", but I prefer to create a new name, called the term annuity.

Buying an annuity is a good option!

12 October 2005

Editor
Forum Page
Straits Times

I refer to the letter "Buying an annuity may not be the best option" by Dennis Ng Kah Wan (St Times, 7 Oct
2005).

Mr Ng said that if he keeps the minimum sum of $90,000 with the CPF Board, he will get a monthly payout of about $711 at the age of 62 for 20 years. He said that if this sum is invested in a life annuity, the payout will be between $398 and $483, depending on which annuity plan you choose and whether you are male or female.

Under the annuity plan now offered by NTUC Income, we pay a guaranteed monthly sum plus bonus. The bonus is determined yearly based on the average yield earned on the investments in recent years. Over the long term, we expect the bonus to vary from 1% to 3% per year, but this is not guaranteed.

If the $90,000 is used to buy a life annuity at age 55, we expect to pay a monthly sum of $543 from age 62, comprising of a guaranteed sum of $473 and an estimated bonus of $70. The monthly annuity will continue to increase each year based on the bonus declared for that year. Assuming an average bonus of 2% per year, the
monthly payment is expected to reach $662 at 72, $807 at age 82 and $984 at age 92.

The life annuity offers two attractions:

- it is payable for the lifetime of the annuitant
- the payment will increase with bonus in most years, providing a cushion against inflation.

From actuarial statistics, about 30% of male and 40% of female are expected to live beyond age 82. This proportion is expected to increase in the future, due to longer life expectancy.

Over 25,000 people have bought a life annuity from NTUC Income. A large proportion of them invested their CPF minimum sum with us. They do not wish to take the risk of living beyond age 82 and running out of money. We have a market share of 65% of all life annuities sold in Singapore. The remaining 35% are shared among 5 other
life insurers.

Tan Kin Lian
Chief Executive Officer
NTUC Income

Insurance Website of the Year

STATEMENT

www.income.coop

We are delighted to be awarded the Insurance Website of the Year in the 9th Asian Insurance Industry Award.

Our new website was designed by an internal project team comprising of our young officers. Our aim is to provide information that is easy to access and can provide useful information to the public. We adopt a practical approach in the design of our website, and avoid the excesive use of graphics, to reduce the downloading time.

We have a website in English, Chinese and Malay to cater to our customers who are familiar with the common languages in Singapore.

Our website now attract 10 million hits each month. It continues to grow rapidly each month.

The website will be the core of our business strategy for the future. It will be the central source of information for our customers, agents and employees. It will contain information about our products, practice notes, forms and other materials. All parties will refer to the same source of information. This will provide transparency and consistency of practice.

The website will be expanded to allow transactions to be submitted. We will actively advertise our website, and will attract more visitors.

Tan Kin Lian
Chief Executive Officer
NTUC Income

Pay $6 an hour?

Editor
Today Paper

I refer to the article "15 jobless citizen enlisted in the mozzie inspector brigade" (Today, 11 Oct 2005).

I congratulate the Holland Bukit Timah Town Council for this excellent initiative to provide jobs to our unemployed citizens and to get them to do useful work. They go round the housing estate to look for potential breeding places of mosquitoes and take the remedial action.

These inspectors are paid $100 a week for 25 hours of work. This works out to a hourly rate of $4.

I suggest that the town council should consider paying $6 an hour. For a person that works 8 hours a day, this will give an income of $1,000 a month. This is necessary to meet the high cost of living in Singapore.

By paying a more adequate rate, the workers can work with pride and treasure their job. They will not move to another employer that pays slightly more. They can build expertise.

I understand the reluctance of the government to impose a minimum wage, due to the need to keep business cost down in Singapore.

Perhaps, the publicly funded bodies can set an example to pay a more adequate wage, and this can set the benchmark for other employers?

Tan Kin Lian

Culture of Goodies

The organiser of a corporate outdoor event said that they gave out 1,500 goodie bags, with tee-shirts and other attractive items.

1,500 people collected the goodie bags. Only 300 took showed up for the outdoor event.

Is this cheating?

Cheating on bus fares

Some people cheated on bus fares. They tap their ezLink card immediately on boarding the bus (instead of time of exit), so that they pay a lower fare. The government is passing a law to punish these cheats.

Is there a better way to handle this problem?

Deductible under Shield plans

QUESTION:

I am currently a IncomeShield Plan B policyholder and will like to seek some clarifications on how claims are processed under IncomeShield.

An agent shared with me the attached article. It is taken from Business Times. It was doing a comparison on the payouts from the different Insurers. I was very surprised that most of the insurers, including Income does not pay a cent in the example where a policyholder stays at Mt Elizabeth for 2 nights.

Could Income explain how the claims are processed? For example, what items will be considered for the deductible. Lastly, if the policyholder had bought the IncomeShield rider, how does it helps in this example?

ANSWER:

All the Shield plans are required to have a deductible, representing approximately 5 days of hospital stay. The principle is that the patient should pay for the first 5 days, and the insurance will pay for 90% of the bill in excess of the deductible.

This condition is imposed by the Ministry of Health.

We offer a rider that charges a separate premium (to be paid by cash) that will cover the deductible and the balance of 10%. Many people have opted to buy this rider.

Tan Kin Lian
CEO, NTUC Income

Private shield plan can cost up to $3,500 per year

Customers compare the coverage offered by private shield plans. They think that the higher coverage, the better the plan.

Here are a few important facts:

- in most cases, the higher coverage is not needed, especially if the patient is treated in the appropriate ward in a restructured hospital.

- a plan that offers a higher coverage can cost up to 60% more in premium.

For example, under plan A, a plan that pays "as charged" will cost $3,500 per year at age 80. NTUC Income offers a similar plan that charges a premium of about $2,100 at age 80, ie $1,400 lower. Our plan pays the same amount for most of the typical hospital stays.

Private Pension Plan - opt out scheme

Prime Minister Lee has announced that the CPF is studying an opt-out pension plan for CPF contributors. The aim is to encourage CPF members to invest in a pension plan that can provide:

- a better return than CPF interest rate
- well diversified
- low charges.

The Combined Fund from NTUC Income fit into this description. By investing in the Combined Fund, the CPF member can get the benefits of the proposed opt-out plan and enjoy the freedom of choice.

Claim 100% of ward fees

Snow White asked this question: "What is your advice regarding the enhanced medical plan, where policyholders can claim 100% of the ward fees (less co-insurance) even if they opt to stay in better wards like B1 or A-wards? The premium are almost 3 times of the original Medishield plan. Should I stay with a hospital and surgical plan."

My reply:

- the limits provided under Incomeshield plan (from NTUC Income) is suffient to cover the charges in B1 and A ward in restructured hospital.

- our premiums are about 50% to 100% higher than Medishield, but are lower than the medical plans provided by other insurers.

- 800,000 people are insured with Incomeshield (giving the largest market share)

- it is better to buy an Incomeshield plan earlier, as it provides lifetime coverage. The H&S plan is a yearly renewable plan. You may not get the coverage when you leave your present employer.

Test your Logic: www.income.coop/logic9

Test your logic.

Try the Logic9 game at www.income.coop/logic9. This game is similar to the game called SuDoku, which is the craze in many countries.

You are to fill the blank squares with the digit 1 to 9, so that it is not repeated in any row, any column or any box (3 x 3).

For the easy version, you have to fill 3 out of 9 boxes. For the more difficult verion, you have to fill 4, 5 or 6 out of 9 boxes.

Have fun.

About Life Annuity

Editor
Today Paper

I refer to the letter entitled "Annuity conumdrum if I die early" by Lim Boon Hee (Today, 27 September).

Under the CPF Minimum Sum Scheme, a retiree is allowed to invest the minimum sum of $90,000 in a life annuity plan at age 55 and to receive the annuity payment from age 62.

Mr Lim asked what happens if the annuitant dies before age 62 (without receiving any payment) or at age 65 (after receiving only a part of the $90,000). Will the annuitant lose part or all of the $90,000?

Under the annuity plan now offered by NTUC Income, we will refund back the balance of the $90,000 with interest up to age 62, after deducting any payment that has been received by the annuitant. If death occurs before age 62, we will refund back $90,000 with interest. If death occurs after age 62 and the annuitant has received $20,000 (say), we will refund back $70,000 with interest earned up to age 62.

The annuitant will only lose the interest after age 62. This interest is left in the annuity fund to benefit the annuitants who live longer. The life annuity will continue to be payable for the lifetime of the annuitant, even if the annuitant lives beyond age 90 or 95 years.

If the retiree leaves the money in the CPF to earn interest at 4% per annum and takes out the monthly sum allowed by CPF, the minimum sum will be fully used up by age 82. After age 82, the retiree will have no further source of income.

With longer life expectancy, many people are expected to live beyond age 82. We can see many people around, who have lived beyond that age.

About 28,000 people have invested in a life annuity from NTUC Income. They realise the benefit of this type of insurance product. They do not wish to take the risk of living too long, and running out of money. We provide about 65% of all life annuity in Singapore.

If the retiree wish to leave behind some money for their family, they probably have a property and perhaps other savings or assets.

Tan Kin Lian
Chief Executive Officer
NTUC Income

NTUC's plan for low income workers

NTUC has suggested that workers earning less than $1,000 be exempted from CPF. This will save them 20% of their wages. They need the full wages to meet a basic lifestyle, due to the high cost of living in Singapore.

NTUC suggested that the government should top up the CPF savings of these low income workers, so that they can buy their HDB flat.

I think that this is a wonderful idea.

In some countries, the government pays people who do not work. It is called unemployment benefit.

The approach by NTUC is to encourage these unemployed workers to work, even if it is a low income job. The government can help them by contributing to their CPF savings. It is an indirect way to give some help to these workers, but they must work.