Wednesday, August 22, 2007

Life Annuity for Tan Kin Lian

A journalist asked me, "Mr Tan, did you buy a life annuity? I suppose that you did?"

Here is my honest reply.

Quote: I did not buy an annuity because I have enough money to last me for the next 100 years, and I cannot live that long. An annuity is necessary for people who do not have enough money, and need to stretch it for their lifetime. Unquote.


Anonymous said...

Annuity in itself is good , there is no dispute about its efficacy. The issue is the payouts are not good as compared to CPF. Having said that, not necessary all people should buy annuity. Like Mr. Tan, why buy an annuity when you have enough to last a 100 years?
I know of people just like the one reported in the press today, who is recieving ten of thousands of dollars from children every month.They have "eat cannot finish"
amount of annuity from children. Not many people are fortunate as them.
The concern is for those poor ones
who are struggling with subsistence
living.They must be helped. I am glad that this annuity payout at 85
will ensure that they will money beyond and beyond. More importantly
their saving in the early years should be maximized and protected.
The one flaw which should be plugged is their Special account is still open to investment and this means it is also open to predators like insurance agents who haven't any idea about investing, to squander for them.If over long term the rate for SA is going up and will be unmatched by market , the SA should be closed to private investing.This makes sense.

Anonymous said...

Mr. Tan,

Would you then agree that the government should only make it compulsory for "people who do not have enough money, and need to stretch it for their lifetime" to purchase an annuity?

In view of protecting local citizens, i agree that some form of scheme is neccessary especially for the mid to lower income. However, i do not see how a payout of 400-500 dollars for the rest of a person's life a month can significantly help. For example, 400-500 dollars for today is probably ok. Do you think it would be sufficient in 30 years time? What would 500 dollars buy you in the future?

Singapore should review once again the possibility of gaining higher returns on the CPF or even looking into the main purpose of CPF itself. Is the CPF for you to buy a home? or for you to have some financial independance when you are unable to work? Why not force more money into the SA since it is already at 4%?

I for one believe that the OA CPF purpose in Singapore is to allow everyone to purchase a home and not something you can fall back on when you retire. Simply put, pay for your home with your CPF. Keep the minimum sum in your OA (because you have no choice but to comply). Make sure you save at least 30% of your earned salary (WHY? because you dont have to pay the housing loan with your personal cash, so SAVE it!). Invest your savings into low and medium risk money markets or high dividend paying stocks with strong management and fundamentals.

Last but not least, educate your children. If you're stuck in this boat, a wise person once said to me 'one generation must always suffer for the rest to prosper'. How willing are you to give a better life for your children. As Chris Gardner says 'Education is a way out'. Educate, educate, educate.

good luck.

Anonymous said...

Dear Sir,
It appears to me that annuity is not popular among investment guru like you rather than you have the money to last very long ? Then, there are quite a lot people who do not know how to invest and also do not know about annuity.

Anonymous said...


I think you belong to the group of investment guru who will not buy annuity. For most people, they might not even know how to invest and might not even know about or understand annuity.

Thomas Phua's Blog said...

Mr Tan earns big salary before and so he saves and invest, and I think when he mentioned his finance can see him through next 100 years, I believe is so.

I think Mr Tan, is not only prudent but I believe he is also a very practical person.

Baby boomer are earners, Generation X are keepers, but sadly Generation Y are spenders today.

- Thomas Phua

Tan Kin Lian said...

I like annuity, for people who need it.

I will buy an annuity to give an annual payment to my children (instead of a lump sum that they can spent away all at once).

I will buy an annuity for my wife, so that she has a steady income for her lifetime.

Anonymous said...

The rich can afford it but they don't want it. The poor need it but cannot have it. This is the great divide and the irony of life.
Sandwitched is the middle incomers, most of the times forgotten.
That is the comedy of life.( It's forgotten here too)
And to preserve this status quo and and sometimes uneasy balance you have the insurance agents to play the role of smoothering the kinks if the equilibrium gets out of balance.Their job is to see that the poor continue to remain poor, a social role.The poor are easy preys of the insurance agents.
Of course,the rich wouldn't hire them. What do insurance agents know
about personal finance, they don't know one end to the other.The rich can have the best adviser. They can even lose without their wealth being affected. They can still retire very comfortably.
But the poor? Oh poor the poor!!!For them there is no room for mistakes.BTW thanks to insurance agents, they are still poor.(the poor make up 80% of the market)
The good news is Govt is stepping in. And at long last get the insurance agents out of the way. The poor can now see light at the end of the tunnel at 85.Their CPF is also protected. It is better late than never.

Thomas Phua's Blog said...

There are simply people who cannot break out of their poverty circle and keep blaming others.

There are people who are considered poor, but are happy and contented.

One need to be practical in life.

Work hard, play hard, and smell the roses. Love your family and be nice to others.

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