Saturday, October 07, 2006

I have created a personal website at I shall be giving more details about my future plans over the next few months at this personal website.

My investments have made good returns over past 20 years

Dear Mr Tan

I am a NTUC Income policy holder. In view of my trust & confidence in NTUC, I have taken up a few life & investment link related policies more than 20 years ago. I am very pleased to note that these investments have made considerably good returns in preparation for my retirement life ahead.

I learn that you have chosen to retire in April next year after having served for 30 years in NTUC (Income). I would like to take this opportunity to thank you and place on record my appreciation for your outstanding leadership, excellent financial management skills and good investment judgement which bring about this great achievements where my family, relatives and NTUC (Income) policy holders at large can reap the benefits

Warmest regards



Dear WSY

Thank you for your kind words.

Tan Kin Lian

Friday, October 06, 2006

Simple and transparent terms for home loans

6 October 2006

Today Paper

I refer to the letters entitled "First discounts" from Ms Angeline Lee and "Spiralling rates" from Mr Deepak Gurnani.

The home loan schemes in the market are indeed quite complex. Many financiers in the market offers different board rates for their home loans. When the board rate changes, the customer may be confused, and is not sure if he still enjoys a competitive rate.

NTUC Income provides an alternative to owners of private properties. We adopt a simple and transparent approach for our loan scheme. We have only one board rate for home loans on variable rates. This applies to all loans taken from us. As the board rate changes, we notify our customer in advance. They know clearly what is the interest rate that they pay at any time.

We revise our board rate to keep in line with the market, but we try to minimise the frequency of changes. Our current board rate is 3.5% per annum, and has been effective since January 2004. We have not changed this board rate for the past 33 months. From 1 Nov 06, we will raise our board rate by a modest increase of only 0.25%. The revised board rate will be only 3.75% per annum, probably among the lowest in the market.

NTUC Income also offers a fixed rate scheme, which keeps the rate fixed at 4.15% per annum for the first 5 years. The interest will revert to the board rate after 5 years. We give an option to the customer to switch to the board rate at the end of the 3 years. This option provides an additional flexibility to the customer to enjoy lower interest rate, under certain circumstances.

We believe that many customers prefer a simple and transparent scheme for their home loans. We offer free processing, valuation and home insurance for the first year of loan. For a customer who switch their existing home loans from another financier to our fixed rate loans, we provide a legal subsidy of up to $2,000.

More details are available fromour website:

Melissa Yam
Head, Loan & Property
NTUC Income

Thank you for creating jobs for matured workers

During the economic slowdown a few years ago, many matured workers were retrenched. NTUC Income created the position of customer relations officers for over 300 mature workers to find a second career.

Last night, after the Income Day dinner, a lady approached me. She said, "Mr Tan, I am a customer relations officer. I want to thank you for creating this job which allowed me to continue to be employed".

She was almost in tears, as she spoke. I was moved.

It was nice of her to express her appreciation. Most people will take these things for granted.

Tan Kin Lian's speech at NTUC Income Day

I joined NTUC Income on 1 April 1977. By next April, I would have completed 30 years of service.

30 years is a long, long time. It is time to make a change.

I will be leaving NTUC Income. This will allow the board of directors to find a new chief executive to lead NTUC Income in its next phase of development.

NTUC Income has several strengths:

- it is financially strong, and has been awarded the highest rating by Standard & Poors among all insurance companies in Asia

- it has passionate, dedicated and competent employees

- it has core competencies, in our call center, low cost of operation, claims management, and a strong pro-customer brand.

It also has challenges to respond to a competitive and changing market.

The future is bright. I am confident that the new chief executive, whoever he or she may be, will be able to use the strengths to bring NTUC Income to greater heights.

The future for me, personally, will be equally exciting, challenging and busy.

I will be working with a few partners to build the technology platform and the business strategy for what I call, "the insurance company of the future". It will operate efficiently to bring down the cost of insurance and financial services to consumers, using the connectivity and power of the internet.

I intend to provide this solution to existing or new insurance companies operating outside of Singapore.

I will also disseminate my knowledge and years of experience through consultancy and training engagements. I like to continue being involved in transforming organisations with innovative and differentiating competencies.

I want to thank so many colleagues and friends who have worked with me during part or all of the past thirty years. You are wonderful people. I enjoy working with you. I shall miss you. But, we will continue to keep in touch.

If you want to know about my future plans, and how things turn out, you can continue to read my personal blog. I will continue to update it regularly.

Thank you.

Tan Kin Lian

Thursday, October 05, 2006

Wait to recover the loss on technology fund

Dear Mr Tan,

One of my relative bought about $70,000 worth of NTUC technology fund. It is now worth about $40,000. Will this fund grow back to at least $70,000?

When they bought this fund, no one advice them that this is a risky fund. As you mentioned, there are ups and downs.

When will my relative recover at least back to their breakeven point ? How long will it grow back from 20cents to a dollar



Dear KT

Your relative will have to wait for the tech fund to reach 35 cents (not $1), before they can recover their investment.

I hope that this can happen within the next few years (but I do not know for sure). Many people expect technology to recover by now, but it seems to be taking longer.

They must have invested at a bad time. Many other investors made the investment at a lower price (or have averaged out on their investments), so they are already making a capital gain in this fund.

I have some personal investment in the technology fund as well, made at about the same level as your relative. So, I will also have to wait.

In my case, I have other investments, so the gain in some funds outweigh the losses in the tech fund.

Tan Kin Lian

Actual return on life insurance policies

There has been some requests for life insurers to post their actual return on their life insurance policies.

NTUC Income wishes to make a start. Here are the actual return on our endowment policies maturing in 2006.

Endowment policies maturing in 2006.

Term Taken in Monthly Entry Maturity Yield
premuim age amount

10 yrs 1996 $100 25 $14,800 4.4%
15 yrs 1991 $100 25 $26,600 5.2%
20 yrs 1986 $100 25 $45,800 6.2%

10 yrs 1996 $100 40 $14,600 4.2%
15 yrs 1991 $100 40 $26,100 5.0%
20 yrs 1986 $100 40 $42,200 5.5%

The maturity benefit included the additional bonus distributed on every 5 anniversary.

The actual return on maturity are attractive, varying from 4.2% to 6.2% per annum.

Our maturity values for a 20 year policy is about 15% higher than similar plans
offered by our competitors.

We give a better return to our policyholders, due to lower commission, lower expenses and lower distribution to shareholders.

StateStreet STI (Tracker Fund)

Two or three years ago, I invested $207,000 in the StateStreet STI tracker fund. It is listed in the Singapore Exchange. This fund aims to track the STI index.

The fund performed well. It appreciated to $328,000 now. I obtained a gain of 58% over this period.

This must be my best personal investment. My other stock selection did not do well.

Timing is one factor for this good return. When I invested, the STI was at around 1600. Today, it is at 2600. So, the chance to make this kind of exceptional return has passed, at least for the near future.

Which ie better - Growth Fund or Global Equity Fund?

Which is better - Growth Fund or Global Equity Fund?

My view: both are suitable.

The Global Equity Fund has 100% invested in equity. It is suitable for long term investments, ie 10 years or longer.

The Growth Fund has 70% invested in equity and 30% in bonds. It has less volatibility and a slightly lower return. But the difference is small.

Most of my personal investments are in the Growth Fund. I may find a suitable time in the future to switch to Global Equity (eg if there is a severe market correction). In the meantime, my current investment is satisfactory.

550 people visit my blog daily

About 550 people visit my blog daily. This is a drop from 1,100 last week. But it is almost twice the average number of visitors previously (before news of my departure from NTUC Income). Maybe, it two weeks time, it will come back to the normal number?

Wednesday, October 04, 2006

Disappointed with Dynamic Guaranteed Fund

Dear Mr Tan,

I am a loyal customer of NTUC Income. I am quite upset about the way my investment was managed. I was introduced to the Dynamic Guaranteed Fund 5 years ago by my insurance agent.

After a couple of years, I realised that the fund is not progressing. I requested an explanation and was told that I can switch to Ideal Plan. I decided not to make the switch then.

My grudge is why must I hold on to the fund for 5 years if the fund managers are not confident of delivering good returns? Shouldn't my money be refunded back without incurring any cost so that I can make a better return elsewhere?

Though it was just a token sum of money that I had invested, I have decided not to purchase "You Need Trust" in future as I can only trust myself.



Dear NHL

I am sorry that you are disappointed with the investment. Many people share your same views.

I hope that you have received our FAQ that explain the situation. I am not able to beyond what has already been explained. I hope that you understand my difficulty.

Tan Kin Lian

Policyholder tops up investment in Growth Fund

Dear Mr Tan

I believe you have given me good advice.

I will try to put in another $8000 or $10,000 quite soon and then arrange to withdraw $400 monthly. How much would I need to invest in Growth fund in total to withdraw $500 monthly? This would be my limit.

I might sell one of my single company stocks to achieve this or just withdraw from my fixed deposit when it matures. Growth Fund is much more stable because it is so diversified.

Did you know the banks are giving less than 3% annually for fixed depoosit below $50,000?

I am glad you will be leaving many of your investments in NTUC Income even after you leave. This is reassuring.



Dear VS

If you wish to have a monthly payment of $500 for 20 years, you will need the following capital sum:

- assuming the fund earn 5% per annum: $77,000
- assuming the fund earn 5.5% per annum: $74,000
- assuming the fund earns 6% per annum: $71,000

Thank you for updating me that the banks now pay less than 3% interest. I suspect that interest rate has dropped, but I was not sure. Your information confirmed it!

Tan Kin Lian

Wonderful experience at Business Center

Dear Mr Pius,

I would like to bring to your attention a very good staff that you have under your employment, her name is JK and she's working at the Business Centre.

I am very pleased with the way she has advised and served me when I went down to the NTUC Income Bras Basah Branch.

I am very impressed with her professionalism and amiable nature as she patiently explained the investment products that NTUC could offer. She was able to make me feel very comfortable with her as she answered my queries.

I have come across 'financial advisors' who are insincere and impatient with clients' queries but JK stands out to be very different from the ones I met.

She understand my needs and make appropriate and sound recommendations. She further advised me to invest my CPF with the Growth Fund. She was even willing to go beyond her office hours just so that she could explain my investments in detail. She did all these with no strings attached. We were the last to leave the office on that day - about 7.30pm.

I am very pleased with Jassie and she has made my experience with NTUC Income a delightful one.

I hope NTUC Income will have more of such exemplary Insurance Consultants. I look forward to future partnerships with NTUC Income.


Which is better - combined or inexed fund?

Which is better - indexed or combined fund?

My answer: both are suitable.

Both funds have low annual charges:

- combined fund (from NTUC Income) charge about 1% annually
- indexed fund (not available yet) will charge about 0.5% annually

The difference of 0.5% is small. The combined fund is actively managed and is likely to earn more than this difference.

Both of these funds are much better than similar funds in the market where the annual charge could be 1.5% to 3% per annum (if other hidden charges are included).

I suggest that the investor can invest in the combined fund now, and decide at a later date, if you wish to switch to an indexed fund (when it becomes available).

The most important principle is:

- choose a large, well diversified fund
- look for low charges, ie 1% or less

I shall keep my money with NTUC Income

Dear Mr Tan

I might even invest some more money at a future date, but perhaps should not put all my savings into Income and should have some fixed deposits in the banks.

Who knows how the company will manage without you?



Dear VS

I advise against putting your money in the bank. They can pay interest at only 3% per annum. It is better to put the money in the Growth Fund, as the return is likely to be much higher.

Don't worry about how Income will manage without me. It will do well.

I have a lot of my personal savings invested in the funds managed by NTUC Income. I shall keep the money there, after I leave NTUC Income.

Tan Kin Lian

Saddened by your sudden decision

Dear Kin Lian

I am SADDENED by your sudden decision to leave NTUC iNCOME.

The way it unfolded was not nice at all and was not done in good taste. From the public perception it wasn't good and fair treatment of someone who has done a lot for Singapore through NTUC INCOME and for people like us, poor motorists and life insurance policy holders, who have been exploited by other insurance companies to say the least.

But there is a lesson in life. People, organisations and Singapore society quickly and conveniently forget what you have done for them and quickly move on. In no time, you are history forgotten and irrelevant, if you no longer serve their purpose.

And there will be fair weathered friends surfacing that you did not realise exist.

I want to stand up for you. I sincerely hope that you will carve out another icon or simply retire and enjoy your life as you wish.

Singapore needs more people like you who can stand up. Far to many Singapore CEOs, esp in certain secured job areas, are apple polishing and weak and have no passion nor commitment.

All the best



Dear AT

Thanks are not as bad as you have painted. I do intend to continue working on interesting projects in the future. You can keep in touch with me through my blog.

Tan Kin Lian

Both parties give different versions of the accident


Dear Mr Tan,

My parked 2-month old vehicle was badly damaged by a hit-and-run lorry. I wasn’t at the scene as I was working in my office. I was traumatized and greatly despaired to see the state of my car when I returned to it much later.

I managed to find out from a witness, owner of a drink stall just next to the accident scene, that a lorry hit some parked vehicle at the scene.

With the witness’ statement, I made a police report.

I immediately put up notices at the accident scene to seek for witnesses who saw the number plate of lorry driver. I visited the scene every day to gather any information that would help to identify the lorry.

In fact, I came across at least 3 witnesses who witnessed the accident but not the number plate of the culprit. You can imagine the stress that I have gone through. Finally, a witness responded to my notice with the number plate of the culprit.

It happened that the lorry was insured by NTUC Income as I found out through LTA search service. I have since provided the information to the Investigation Officer.

I have also made a claim to NTUC Income against the lorry driver with all the necessary documents, including police report, survey report and contact information of Investigation Officer.

To my horror, your claim officer, replied that her insured claimed ignorance of the accident and that his lorry was not damaged, despite of existence of witnesses!

Your advice and help will be greatly appreciated.




Dear OSH

According to your email, our policyholder denied getting involved in the accident with your car and the police is currently investigating into it.

We hope you understand that we are not able to settle your claim with the present facts. Our policyholder will be very angry with us if we ignore his story and settle your claim.

To expedite matter, I will ask one of our investigator to have a thorough interview with our policyholder and we will see what come out of it.

Eddie Loke

Tuesday, October 03, 2006

Is my investment of $62,000 adequate?

Dear Mr Tan

Do you think the Growth Fund is good to invest in long term? Or is Global Equities better?

Recently I bought $62,000 into Growth Fund ( switching some of my Balanced fund and Spore Equity units ) and also topping up with new funds.

I have asked for a withdrawal of $300 monthly for my monthly expenses, as I am a retiree.

Do you think my investments can sustain this withdrawal?



Dear VS

Both the Growth Fund and the Global Equity Fund are suitable.

If you have invested $62,000 and you draw out $300 a month a month, the investment can last you more than 35 years (if you earn an average of 5% p.a.) and nearly 50 years (if you earn an average of 5.5% p.a.). The balance on the money passes to your estate on death (provided that the money does not run out). I think that your invested sum is adequate.

You can ask your adviser to explain more to you.

Tan Kin Lian

I agree with you entirely!

Hi Mr.Tan,

I read with mixed feelings the news regarding your planned departure from NTUC Income in April 2007.

On one hand, I felt sad to see someone who always wants to give the policyholders a good deal leave NTUC Income, my preferred insurer.

On the other hand, I felt that trying your hand on something new after 30 years on a job may turn out to be refreshing and challenging for an active mind like yourself.

Despite your position as a large company's CEO which may sometimes attract undue criticism, you always speak your mind, sometimes on topics not linked to insurance. You always have a view on any issue.

For this, I admire you even though at times my own views on some matters differ from yours.

May I wish you happiness and success in your future endeavours.



Dear CKK

Thank you.
On this matter, I agree with you entirely.
Wish you all the best!

Tan Kin Lian

Monday, October 02, 2006

Is it advisable to downgrade to a lower plan?


Dear Mr Tan

A few years back, my family upgraded Incomeshield plan from B to A.

For me personally, should I be hospitalised, I would like to stay in a subsidised ward, ie B2. That being the case, since the deductible and co-ins is higher for A plan than B, isn't it advisible for me to downgrade from Plan A to B?



Dear AL

We advise our policyholders that if they are comfortable with B1 or B2 ward, there is no need to purchase a higher medical plan and pay a higher premium.

As we grow older and move to a higher age-band, the premium will increase. We should move to a lower plan so that the premium remain affordable. There is a higher government subsidy for restructured hospitals at the lower class wards.

If our policyholder is insured under a higher plan and opt to be treated in a lower class ward, we apply the deductible of the lower ward. This is reflected in our FAQ:

Tan Kin Lian

How to identify people with strategic thinking?


Hi Kin Lian,

History has thought us that as leader of a Strategic Business Unit, we do recognize that there are basically two types of employee we need to run a business and to leap forward successfully; one that is doer and one that contribute strategic or creative ideas when needed.

The first type is most easily found in today’s world, but the latter type is almost hard to find. But we need them especially so when we are living in such a competitive environment. Not all leaders are creative.

In your many years of leading NTUC Income, I am sure many of the creative ideas were generated which have brought NTUC Income to such great success.

How do you go about sourcing for such type of employees who can contribute to strategies and great ideas? What criteria you would place upon to sieve out such people? Where do you normally source from ?

I found that if the existing employees do not possess such competency, many hours of brainstorming would not yield results. What is your opinion ?



Dear SK

Here are my views about creating an environment for creative and strategic thinking colleagues to come forward.

- strategic thinking is a process
- we have to try it and see if it works
- if it does not work, it is just theory
- the leader must be prepared to back the strategic thinking

I have to play this role in NTUC Income. I encourage my colleagues to think "out of the box". I encourage them to "do, learn, adapt". What is strategic happens only if it is tried and found to work. If it does not work, we try again.

My colleagues love this approach. So, we do have some great creative things that are done in NTUC Income, which contribute to our success.

I hope that these points are useful to you.

Tan Kin Lian

Sunday, October 01, 2006

Projected bonus on participating policies

The Sunday Times printed an lengthy article to explain the projected bonus on participating policies.

I received the following question from the public:

- how can I find out the actual investment return earned by the various life insurance companies?

- does a company with a higher investment return give higher bonus to their policyholders?

I gave this reply:

- generally, a company that earns a higher investment return should be able to give a higher bonus, and a better return

- but it also depends on their expense ratio and the amount of the profits taken by their shareholders.

It is better to ask the company to tell you about the actual return earned on a policy that was taken 10, 15 and 20 years ago and matured this year.

You can compute the actual return on the policy, and compare it with the return on similar policies taken with other companies. This comparison is more straightforward.


Here is an example.

A customer bought a endowment policy 20 years ago, and paid a monthly premium of $100. The policy matured recently.

If the participating fund earned an average of 6% per annum, and paid ALL of the gain to the customer, the customer would have received a maturity beenfit of $47,000.

Most life funds would probably have given a return of about $37,000 (ie about 4% per annum). The difference of $10,000 is used to pay the agent commission, expenses and profit to the shareholders.

An insurance company operating at low cost may be able to give about $42,000 (ie about 5% per annum). They pay lower commission and expenses and give less to shareholders. Compared to similar "high cost" products, they can give agout 15% more on maturity.

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