Annual and special bonus

Dear Mr. Tan,
NTUC Income has reduced the annual bonus and increase the special bonus. Is the special bonus guaranteed? Can the special bonus be reduced in the future? Can I trust NTUC Income to honour the special bonus that is being projected now?

REPLY
The special bonus is not guaranteed. It can be taken away at any time. This has happened in the case of other life insurance companies. When they reduce the special bonus, the impact on the policyholder is very severe.

It is better to have a high rate of annual bonus, rather than a high rate of special bonus. An annual bonus is vested in each year as it is declared, and cannot be taken away. A special bonus does not vest until the time of claim.

In the past years, NTUC Income has a fixed rate of 25% for special bonus. As this is a uniform fixed rate, it has honoured it for the past 20 over years.

In the future, the special bonus is not an uniform rate, and may vary according to type of policy and duration. You can never be sure that you are getting a fair share of the special bonus, especially when the investment climate changes.

If you do not accept this change, you can lodge a complaint to MAS. This is a fundamental change of practice, which affects the reasonable expectation of the policyholder. It is important for MAS to ensure that the new practice is done in a manner that is fair to all policyholders, now and in the future.