2 June 2008
I refer to your News Comment “Which hat was Tan Kin Lian wearing?” (Today, 2 June).
I have two policies affected by the bonus restructure. My initial reaction was to terminate these two policies and take a loss. I decided against this course of action, as I would lose the opportunity to raise this issue as a policyholder. My key concern was that 310,000 policyholders should not lose out.
Under the new bonus structure, the policyholder receives a lower annual bonus, to be compensated by a higher special bonus payable on surrender, death or maturity. My concern was that the special bonus is not guaranteed and it is difficult to keep track of the correct amount of special bonus required to compensate the cut in annual bonus for each policy.
After I started the collective protest, I obtained another important piece of information. The average investment yield earned by Income during the past 10 years was 7.8% per annum. This was higher than the yield used to project the bonuses at the point of sale.
Most of these 310,000 policies had received bonuses that are lower than originally projected, due to the cut in bonus during some past years. I felt that it is more important for these past bonus cuts to be restored, subject to financial solvency.
In my meeting with Mr. Lim Boon Heng and Mr. Matthias Yao, I raised these two issues. They understood my concerns and reaffirmed that Income would observe its social purpose, treat policyholders fairly and give a good deal to the policyholders. They said that the management will need some time to find the appropriate measures to achieve these goals.
Income has issued a statement, which is posted in their website, to address these concerns. The statement is reiterated by the chairman at the annual general meeting.
The first two points address the concern about the payment of special bonus. The third point that “the bonus allocated to policyholders should be fair and consistent with the experience of the fund” is more important for the long term interest of the policyholders. I am following up with Income on this important goal.
The comments of your editorial director about my “strategic errors” arose from a misunderstanding of my purpose, which is to protect the long term interest of the policyholders. I hope that the resulting actions will benefit the other policyholders as well.
Tan Kin Lian
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