Primary 1 registration

The following thought crossed my mind when I read about the new rules regarding primary 1 admission:
http://www.channelnewsasia.com/…/new-primary-1/1871218.html…

I wondered:
1) Why do parents take the trouble to move their residence near to a "good" primary school?
2) Why is it necessary for a new rule to be introduced to prevent the "abuse"?
3) Is the school going to expel a pupil who has broken this "2 1/2 year rule"?
4) Is there a better approach?

Medishield Life - household information

I overlook the hard copy mail that was sent to me regarding Medishield Life transitional subsidies. Fortunately, I got this timely reminder from Richard Giam's Facebook:

Quote

Please remember to log in to www.medishieldlife.sg with your singpass. To declare your household members in order to receive the 4 years transitional subsidies given by the government due to the implementation of medishield life.
Only 1 member each household need to do this. So any member of the family can do it.
Please do this by 6th of June 2015.
Ministry of health data collection to decide on the subsidy for the coming medishield life exercise. Fill up and replyTake only less than 5 mins to confirm your household members details.

Unquote

I am sure that there will be a few hundred thousand people who would have overlooked this step, like me. Why was it necessary to carry out this registration? I guess that the government wanted to give a lower subsidy to those who stayed in private houses.

As the government intends to label people according to the type of house that they stay in to give different levels of subsidy, it is better than they assign a code that will last a lifetime. They can use this code to determine the amount of GST offset and other subsidies. It is wasteful to carry out a separate "registration exercise" every time.

A better way is for the government to impose higher property taxes (if this is really necessary) for people who live in private houses. (Actually, this is already happening). After imposing this higher tax, they should give the same level of subsidy to people without worrying about the type of housing that they stay in. They can still differentiate by age group. 

It is wasteful to carry out this type of unproductive work, which must have cost the country several tens of million dollars each time. This waste should be avoided.

Follow the rules

I overheard two elderly teachers discussing how to deal with student issues in school. One teachers raised two issues - taking drugs and being raped. Should the teacher inform the parent? According to the school manual, these affect the privacy of the student. The teacher is not supposed to inform the parent. He said that the parent should be informed, but it is best to "follow the rules".

I dislike thus "follow the rules" mindset that is prevalent in Singapore. What if the rules are written wrongly? Do we follow them blindly?

Common lobby for 2 gates

My flight to Jakarta used gate C25. It uses a common lobby with C19 but there are 2 separate doors and 2 separate screening gates. The door to C25 is closed and the screening gate is unattended. Many passengers to Jakarta were waiting outside, confused. There is a queue waiting to be screened at C19. I asked a security staff why C25 is still closed. She said that it uses a common screening gate as C19. To her, this is "understood". She did not realized that many passengers were confused and waiting outside. This "brainless" behavior is quite common. 

Poor business at Kopitiam

I visited Kopitiam at Greenwich V at 8.30 am on a Sunday morning. Only 2 stalls were operating - the drinks stall and the noodle stalls. Another six stalls were closed.  This is in stark contrast to Hong Kong where the restaurants were packed every morning at 7 am. 

Lions XII win the Malaysia F.A. Cup

Congratulations to coach Fandi Ahmad and the Lions XII team for wining the Malaysia FA Cup. It is an unexpected win and something for Singaporeans to be proud of! Here is the coverage in the front page of Today paper. Link

I was following the live blog of Channel News Asia last night. Congratulations to CNA for covering this event. 

Posting in blogspot

I had stopped posting in blogspot for the past year to focus on Facebook. I have now decided to abandon Facebook and come back to blogspot.

Although the readership in blogspot is smaller, I find it  to be a better platform. I do not get the idiots from the Internet Brigade posting their nonsense in my Facebook page.

A morning walk

I took a Sunday morning walk from my home to Greenwich V, a distance of 2.2 km. I could have driven or taken a bus, but I decided that a walk would do me good.

Along the way, I saw a plump woman walking in front of me. As I passed her, I said "good morning" to her. Guess what happened?

Well, she turn around, smiled and said "good morning" to me!. Further down the road, she run passed me to a waiting car. As she entered the car, she looked at me. I gave her a wave and she waved back. The male driver of the car must be wondering what had happened!

Further down the road, two female joggers passed me. I said "good morning" and they replied back.

On the way back, a male jogger was coming towards me. As he passed, I said "good morning". He panted and replied back with a "good morning".

All the people that I had met that morning were polite in returning a greeting.

Turning a weak point to an advantage

My friend told this interesting story of how he turned a weak point to an advantage and landed the job that he was passionate about. Link

Can Singaporeans think?

The writer of this article made a statement that most Singaporeans cannot think. It attracted several interesting responses. Half of them disagreed with him while the other half agreed. I also agreed with his view. Most Singaporeans cannot think and lack common sense.  Link to the article. 

Fake flash drive?

I bought this 32G flash drive from Hong Kong for HK 10 (or SGD 1.60). 
It does not work. I think that this is a fake flash drive. 

Protecting the image of Mr. Lee Kuan Yew

SINGAPORE – The Government is looking at enacting laws to protect the name and image of the Republic’s founding Prime Minister, the late Mr Lee Kuan Yew, from commercial exploitation and misleading use.

Culture, Community and Youth Minister Lawrence Wong revealed this while speaking to the media at the sidelines of the National Community Engagement Programme Dialogue today (May 23).


Mr Wong said the move comes as many members of the public have raised concerns over the misuse of Mr Lee’s name.

A POSTING BY SEE SEAH

See Seah
This is a dangerous preposition ....As much as we respect the Late LKY ...we should not reduce him to be a Cult figure or allow ourselves to embrace such culture of being overly obsessive...as I remember what was being spoken by one of LKY grandson during his eulogy speech which reminded us that we should remember LKY by the system and foundation that he has built and not by monuments and legislating rules on the use of his names that reflect badly on our society maturity...as a nation.

New Zealand Air Force

My friend said, "It is quite funny that the symbol of the New Zealand Air Force is the Kiwi - a bird that cannot fly.

I told him that the Kiwi is the national symbol for New Zealand, and not for the Air Force alone. He said, "is it"? 

Singapore Lions XII in Malaysia Cup Final

Best wishes to Lions XII. I was not following football and was surprised that our team is doing well to reach the finals!
Click here for more details.

The case for a minimum wage in Singapore

Kenneth Jeyaretnam said:

A few days ago I put up a post on Facebook about the decision by the Los Angeles City Council to raise the minimum wage in the city to US$15 per hour. I asked why Singapore could not afford a minimum wage of, say, $8 per hour. In response an American economist gave his reasons why the case for a minimum wage was much stronger in Singapore than the USA:

There are many. But I’ll give you four. One, the Singapore workforce is now nearly 40% foreign imported labour vs. 16% in the US. Actually, since a good percentage of foreign workers stay and eventually get citizenship vs. very few in Singapore, the gap is effectively much larger. Two, Singapore has much tighter controls on immigration than the US. Three, Singapore’s “democracy” is structured to minimize specific-issue local dissent. Four, Singapore is a city-state with a tiny physical geography while the US consists of 50 states, DC and nearly 10 million square km.


Read the full article here.

Famous People

Can you recognize the famous people in this painting?  Click here.

Confusing taxi fares

The taxi fares in Singapore is confusing. Even a local person, like me, can easily fall into the trap and pay a much higher fare than necessary.

I returned back to Singapore from Jakarta last Monday past midnight. The concierge at the airport directed me to a waiting taxi. The taxi is white in color and had a special branding. I asked the taxi driver if it is a standard taxi and he said "yes".

When I arrived home, the taxi fare was $37. The normal fare was around $25, even after midnight. I asked why it was so expensive, and the taxi driver said that there was a surcharge after midnight. I believed that it was a non-standard taxi, but he appeared to be "blur".

In the past, the concierge would asked me if I wanted a non-standard taxi at a higher fare. That night, the concierge did not ask me. She just directed me to the specific taxi..I suspect that she was new to the job, or was being bribed by the taxi driver to direct a passenger to the higher fare taxi.

This is why I dislike the confusing taxi fare structure in Singapore. It is subject to abuse, The public could be conned when they are not aware about the higher fares.

Visit to Hong Kong, Shenzhen and Guangzhou

I visited Hong Kong, Shenzhen and Guangzhou in early May and spent a total of 5 days in these cities. It was a pleasant trip. I met many nice people and found the shopping and food to be very good in these cities.

I liked the early morning yam-cha in all the three cities. The food is good and the prices are inexpensive. The early morning crowd are mainly the elderly people, who spent their time in leisure to eat the dim-sum, read newspapers and chat with friends. What a contrast to the hectic life and the relative lack of socializing in Singapore.

The restaurants in all three cities are packed in the morning, afternoon and night. They have a high turnover of customers, indicating a high level of productivity. In spite of the large crowd, their service is excellent. They service staff are well trained.

Prior to this visit, I had the impression that it is not safe to be in Shenzhen and Guangzhou. This fear was unfounded. I did not face any problem with criminals in these cities. Everybody is busy with their work and daily activities.

Shenzhen has a population of 10 million, which is almost twice of Singapore. Guangzhou has a population of 15 million. It did not seemed to be too overcrowded.

I stayed at the Holiday Inn in Shifu, which is next to one of the popular pedestrian streets.  On my free morning, I took the underground train in Guangzhou for four stops to visit the shopping center in Beijing Road. The train system is well organized. It was quite full, but not packed. I liked their signage and the announcement of the stops. They numbered their train lines, which made it easy to remember. My station served Line 1 and Line 6.

I like Guangzhou and will make a longer visit in the near future.

ASEAN agreement

Kenneth Jeyaretnam writes about the ASEAN Agreement on Free Movement of Labour and the risk that this agreement poses to Singaporeans in competing for jobs in our own country. This agreement will come into effect in December 2015. It will also confer mutual recognition of qualifications for several professions.
Read this article. 

National productivity Fund

Mr Kenneth Jeyaretnam wrote this open letter, published in his website, regarding the National Productivity Fund. He is concerned that a lot of money has been transferred into this fund and there is no accountability of the money spent. I share his concern. Link

What is a life annuity and how does it work?

Suppose you have $400,000 in saving at age 65. You decide to set aside $100,000 as an emergency fund or to give to your children when you pass away. You invest $300,000 to get a monthly income.

You are told that the life expectancy for a normal person at age 65 is 20 years, and you belong to this category, i.e .you are not unhealty nor super healthy.

The insurance company (or CPF) offers you two choices:

a)  FIXED ANNUITY FOR 20 YEARS. You can get $1,840 per month payable for a fixed period of 20 years. If you die earlier, the balance of your savings will be paid to your family. However, the money will run out after 20 years, and you will get nothing after than.

b) LIFE ANNUITY. You will get $1,840 per month payable for your lifetime. If you die before 20 years, the balance of your savings will be kept in the fund to pay the monthly income for those who live beyond 20 years. If you live beyond 20 years, you will continue to get the monthly payment as it is taken from those who left the balances in the pool when they die.

Which annuity do you prefer - the fixed annuity for 20 years, or the life annuity?

Under the fixed annuity, you stand the risk that you will live beyond 20 years and your money would have run out by that time. Under the life annuity, you are assured of receiving the income for your lifetime, but it could be shorter or longer than 20 years. You are pooling your "longevity risk" with the other members of the pool.

Your decision will depend on your belief - do you like to pool your risk with the other members of the fund? This assumes that you belong to the group that expects to have a normal life expectancy, i.e. you do not have any reason to believe that you will die earlier or later than most people of the same age as you.

What is your choice?

c-pearl.com

Visit this website for the following information that may be useful to you:
www.c-pearl.com

Condo - details of condos in Singapore
Bus Service - find bus services at any bus stop, or all the stops for any service
Forms - locate forms from government agencies or business organisations (CPF now available, other forms will be provided
Find Word - help for this 4 picture-1 word game
Financial Planning - prepare your financial plan
Financial Projection - new format (being developed).
TKL books - under development.

www.c-pearl.com

Pinnacle Notes

If you are an investor in the Pinnacle Notes, please read this notice urgently.

Dear Mr Tan,

As you may know, the deadline for investors to claim their share of the Pinnacle settlement fund is 2 June.  Would you perhaps post some notice on your blog about the claim deadline?  Attached is an ad that we ran in the ST last week that contains all the relevant information for claiming.  Feel free to post the ad itself. 

Daniel Hume

Kirby McInerney LLP

Click here:
http://c-onyx.com/pdf/2290

Land banking in Georgia USA

I received a letter from a UK lawyer that a comment posted in my blog is defamatory and asked me to remove the comment. I have done so.

I am surprised that this blog, which is already three years old, is still attracting the attention of the unnamed company X. Something must be happening here.

http://tankinlian.blogspot.sg/2012/07/land-banking-in-georgia-usa.html

Do not invest in unregulated investments

Dear Mr Tan,
I read your blog.
Have you heard about this UFUN (www.ufunclub.com)?
A lot of people (Spore, Msia, Thai) are investing and claim they are getting good returns in the first few months. Is this kind of investment safe?
They give dividends (in the form of e-token) to members and the returns are good.
They are inviting a lot of new members to join.
Each investment can be US$500, US$1000, US$5000, US$10000 and US$50000.
‎Pls comment if you know about this UFUN scheme and if some people have already fallen prey to this scheme.

REPLY
I have not heard about this scheme. My comments below apply to questionable schemes in general and are not related to this specific scheme.

I would advice people to avoid investing money in schemes that are not regulated by the authority. It is easy to give your money away, but quite difficult to get it back.

Even if you are getting back the return, in the form of dividends or principle, remember that the money that is used to pay you may come from the investments of other people. Similarly, your money may be used to pay off the earlier investors.

This type of scheme is called a Ponzi scheme. The Ponzi scheme will grow as more and more people join. Eventually, when there are more people wishing to withdraw their investments, the scheme will close down and the promoters will disappear. The investors will not get their money back.

Lighten Medisave burden on self-employed seniors

Contributed by Dr. Tommy Wong

From 1 January 2014, the Medisave contribution rate for non-pensioners and for those who are age 60 and above is 9.5%. This rate applies to both employee (monthly wage ≥ $750) and self-employed (average monthly income > $1,500). There is a cap of $5,700- on the annual contribution for the self-employed. While this practice appears fair on surface, there is actually a hidden burden to the self-employed.

For the employee, the following table shows the contribution rates by the employer and employee to the employee’s CPF account. So even though the Medisave contribution rate is 9.5%, depending on the age, the employee's ​​contribution rate is ​7.5% or 5.0%.

Employee Age (Years)	Contribution Rate (for monthly wages ≥ $750)
	Contribution by Employer (% of wage)	Contribution by Employee (% of wage)	Total Contribution (% of wage)
Above 60-65	7	7.5	14.5
Above 65	6.5	5	11.5

On the other hand, for the self-employed, since there is no employer’s contribution, they have to pay the entire 9.5% contribution all from their own income. So, compared to an employee, his take home pay is lower. For the self-employed whose financial situation is not well off, this is a real burden.

Can the Government review the Medisave contribution rate for the self-employed seniors so that their burden​ can be lightened?​

Dr. Tommy Wong is the author of the book series "Wisdom on How to Live Life" The ebook series can be ordered at http://c-opal.com/pdfbook/6. His website is at http://wisdomlife.page4.me/.

How to use the IRR function

 you have a complicated stream of cash flows under a life insurance policy, you can use the IRR function to calculate the yield, as explained here:http://c-onyx.com/page/1893

Internet banking is difficult with DBS Bank

If I use the standard of the internet banking system of DBS Bank as a gauge, I have to declare that the level of efficiency in Singapore is deplorable. It is so wasteful and inefficient. That is why Singapore has become so costly, and has achieved the distinction of being the most costly city in the world. 
Somehow, the impractical approach adopted by our regulars and businesses towards managing business risks has added layer of costs and waste to the economy. 
It can be so costly so to handle simple business transactions and to make payments.

Here is my painful experience. I spent one hour to make payroll for four employees through Internet Banking for DBS Bank today. 
As there were two new employees, I have to register them as "a new beneficiary". After registration, I could not find these beneficiaries. 
I called their hotline, listen to all kinds of irrelevant messages and spoke to their help staff. 
She asked me to click a few buttons, but none worked. She had to go and check their back end system and call me back.
My admin staff was at my side to double check that the entries were made correctly. She wasted one hour as well.
I may have to revert to paying by cheques.
This is the level of inefficiency that I have to encounter each month. My feedback to DBS Bank over the past year went through deaf ears. They don't care.
I could not move to another bank as they do not have a branch nearby.

Coal mining venture - is this a scam?

Is this investment a scam?
http://c-onyx.com/page/1902

If you offer you a guaranteed interest rate and a buyback option, do you find it to be more acceptable?

Create a pseudo rural sector to raise the reproduction rate

In most countries, the marriage and child birth rate in the cities is low. This is due to the high cost and stress of city life. These countries have a rural sector where the cost of living is low and where most people married at a young age and raise many children.

These countries with a rural sector have an overall fertility rate that is higher than countries with a high urban population.

If Singapore wishes to increase our reproduction rate, we need to build a "rural sector" where some families can afford to marry at a younger age and raise a family. But it is not possible to have a real rural sector in Singapore due to our small land area and the high cost of housing.

We can create a pseudo rural sector which allows some families to marry at a younger age and raise a family.

 How can this be done?

The Deductible under Medishield Life can be removed

I find it quite ridiculous that we take so much trouble to design a medical insurance scheme, called Medishield, that pays a small proportion of the hospital bill. It is better to change the scheme to cover a larger proportion of the hospital bill and make it more meaningful. 
One change is to remove the Deductible or reduce it to small amount. 
Here is the explanation
http://c-onyx.com/page/1894

Hedging a stock portolio

I have $X invested in shares, mostly in Singapore. I do not like the events in Ukraine, Iraq and South China Sea. I wanted to sell some of my share holdings, but it will take some time. 
I decided, as an alternative, to sell $X in futures (S&P and Nikkei). If the stock market falls by 5%, I hope to be able to gain 5% on the futures. However, if the stock market rises by 5%, I will lose 5% on the futures. So, my net exposure should be nil.
My actual holdings in shares will not correlate exactly with the two indices that I have sold. So, there will still be a small net exposure, perhaps of 10% or so. It does not matter. At least, I am more than 90% protected.
When the events are resolved, I can remove the positions in the S&P and Nikkei and continue to hold my long stock position.
This is an example of using the futures to hedge an existing stock portfolio.

I use the online platform called Plus500.com. It is easy to use and is much better than other platforms that I have tried previously.

Tan Kin Lian

CPF milestones and timelines

http://leongszehian.com/?p=9248

5 July event in Hong Lim Park

I have decided to speak at the 5 July event in Hong Lim Park asking if Lee Hsien Loong is the right person to lead Singapore. https://www.facebook.com/events/657651847623510/?ref_dashboard_filter=upcoming

I hope that many of you will turn up to hear my speech. Do register in the page to show that you are joining the event. 

Question: will I support or oppose this motion? Come and hear my views.

A pathetic response from a Member of Parliament

The 76 year old lady begged for her CPF money to be returned to her. MP Hri Kumar could only say that these are the rules, and everyone must abide by the rules - good and bad. They cannot take the good without the bad.
https://www.youtube.com/watch?feature=player_embedded&v=70AbFnGD928

I find the MP's reply to be pathetic. Surely an MP can give a better answer? Does the MP know that the lady, and many others, did not agree to the rules that lock away their CPF money?

A better answer from a good MP is - if you know how to take care of your money, if you know the consequences of your decision, and your personal circumstances justify the return of your CPF money, I will speak on your behalf to ask for your money to be returned to you.

And this special consideration should be given to other people who have good reason to take out their CPF money.

This will create some work for the MP and for CPF, but what are they elected or employed for? They have to use their judgment and do not implement rules blindly !

Poor standard of our civil service

I applied to speak at Hong Lim Park and received an approval e-mail from the National Parks Board.

Dear applicant,

Your application to register your event has been approved. In registering your event, you have agreed to the Speakers’ Corner terms and conditions of approval for events and activities carried out at Speakers’ Corner, Hong Lim Park.

Please note that you will be required to apply for a police permit or licence if any of the organisers and speakers are not Singapore citizens, or if any of the participants are not Singapore citizens or permanent residents.

Please refer to the Public Order Act, Public Order (Unrestricted Area) Order 2013, Public Entertainments and Meetings Act and the Public Entertainments and Meetings (Speakers’ Corner)(Exemption) Order 2013 for information on the situations you will be required to apply for a police permit or public entertainment licence under existing laws.

As an organiser, you are responsible for ensuring that the laws are complied with. We also seek your cooperation in helping to keep Hong Lim Park litter-free.

Please print this page as proof of your registration and bring it on the day of your event. Thank you.

Yours sincerely,
Commissioner of Parks and Recreation

HERE IS MY REPLY
Dear National Parks Board,

There is no information in your email about the event that I have registered for, which you have approved.

MY COMMENT
There is something seriously wrong with our civil service. They cannot get a simple procedure right.
I am not an organizer of the event. I am just applying to speak. Their reply holds me responsible as an organizer.

Should I join Eldershield at 40?

Several people have asked for my views on whether it is advisable for them to buy Eldershield insurance.

Basic Eldershield is recommended and designed by the Ministry of Health and is underwritten by three insurance companies - NTUC Income, Great Eastern and Aviva. Each person, on reaching age 40 will be assigned to an insurance company at random, but is allowed to switch to another company.

Click here to read my views:
http://c-onyx.com/page/1881

Life insurance - before and now

There was a time, long ago, when life insurance was good. The insurance company took your money, invest for the long term, earn a yield of 6.5% and give you a return of 5%, after expenses and profit. 

You are not able to earn a yield of 5% from other investments, except for quality shares, but most people do not know how to invest in these shares.

Today, life insurance gives a bad deal. The insurance company takes your money, earn a return of 5% and gives you a return of 2.5%, after expenses and profit.

You can get a good return by investing in an index fund, i.e. the STI ETF. This can give you a return of 6% or more. This gives you a payout that is more than 50% higher than the payout from a life insurance policy.

If you have a better choice, why put your money in a traditional or investment linked policy and get a poor return?

To learn more about how to invest in a better investment, attend this talk:
http://c-onyx.com/page/1056

What caused the high cost of living in Singapore?

Singapore has become one of the most expensive cities in the world. We did not achieve this dubious distinction from nothing. There are a few important factors.

1. Top most must be the high cost of properties. This has its multiper effect to all parts of the economy, affecting housing, commercial rentals and even the rentals of food courts!

2. The high taxes collected from vehicles, goods and service taxes, levies and other fees.

3. The high prices charged by many large companies that are mostly owned by the government.

4. The wastefulness and inefficiency of the way that we do our business or carry out our activities, due to an excessive and impractical cautious approach and a disregard for cost.

I have made many observations in the social media. Sadly, most Singaporeans are used to the inefficiency and wastage and consider it to be "acceptable".

Well, it is one important factor leading to the high cost of living in Singapore.

http://c-onyx.com/page/1876

Practical measures to help PMEs to find jobs

There is a simple solution that the government should introduce to help PMETs to compete for jobs against foreigners on employment pass.

Here are two practical measures.
http://c-onyx.com/page/1866

A quick analysis of Medishield Life

I have done a quick analysis of the increase in coverage and premiums under the newly introduced Medishield Life

The results are shown here:
http://c-onyx.com/page/1865

Tan Kin Lian

Note: if you find any mistake in my figures, please send an email to kinlian@gmail.comNote: if you find any mistake in my figures, please send an email to kinlian@gmail.com

Why consumers should invest in the STI ETF

The best investment plan for long term savings is the Straits Times Index ETF. The reasons are:

a) It is well diversified, reducing risk
b) It earned an average yield of more than 9% over the past 20 years, after deducting expenses.
c) The expenses is only 0.3% per annum.
d) When investing for the long term, you can ignore the dialy market fluctuation.

If you are investing for 30 years, the difference between an investment linked policy that pays a net yield of 3% and the STI ETF (assuming only 6%,) is quite large. The STI ETF can pay 50% more. If you get $200,000 from the policy, you get $300,000 from the STi ETF.

You can take a monthly sum of $100 or more in the STI ETF using the regular investment plan offered by POSB or OCBC. See
http://c-onyx.com/page/42

To understand more about this investment, attend this talk. Spend $30 and 3 hours. and get a lot more for your retirement!

http://c-onyx.com/page/1056 See More

Enroll your children for the financial planning talk before they start work

A man visited my office to buy my life insurance book. His son, who was just about to start work in a contract job, was approached by an insurance agent who recommended to him an investment linked policy with a monthly premium of $300 and other riders to cover death, accident and disability with a total monthly premium of $70. The son had no idea about what the policies were for, so he approached his father for advice (what a sensible young man!). The father approached me.

I analyzed the policies and came to the following conclusion:

a) The investment linked policy had a projected value, at the end of 30 years, of $180,000 (based on the average between the 4% and 8% yield).
b) If the son invested the same money in the STI ETF earning an average yield of 6% (similar to the projection), the projected sum is $280,000, after deducting expenses and setting aside $10 for the cost of insurance.
c) He does not need to spend $70 a month for the additional covers. By spending $30 a month, he will have adequate term insurance under the SAF policy.

The father decided to enroll himself and his wife and son for the Financial Planning talk on 21 July to learn about financial planning for his son.

He was glad that he saw me, as this information could give his son an additional $100,000 in 30 years time.

I wish to send this message to other parents. Your children will also fall into the trap of buying the wrong investment product. Enroll them and get them to attend the financial planning talk.
http://c-onyx.com/page/1056

Note:
Although the investment linked policy use a projected yield of 6%, the actual yield is only 3.2% due to the charges and upfront fee, amounting to 2.8%.
For the STI ETF, the net yield is 5.7% as the annual fee is only 0.3%

How to stop mis-selling of life insurance policies

I make a guess, and this is just a guess, that 30% of the life insurance policies sold each year are sold wrongly and for the wrong reasons.

Examples are:
a) Policies that require a big monthly premium to be paid that is beyond the means of the policyholder, such as a student that is not working

b) Policies sold on the misconception that it is a form of savings that can be withdrawn like a fixed deposit, without the policyholder realizing that one or two years of the premium will be forfeited.

c) Policies sold to a policyholder who thinks that it is a single premium policy, when in fact it is an annual premium policy.

d) Policies sold to replace an existing policy - on the false claim that it offers better value to the policyholder.

In most cases, the agents were aware about the misconception and were in fact, responsible for telling misleading the policyholder.

When the policyholder finds out the truth and lodges a complaint to the insurance company, the officer handling the complaint gets a statement from the agent. The agent will deny any wrong doing, and the officer usually tells the policyholder that the complaint is not substantiated, in other words, the consumer cannot get their money back.

If the officer bothers to use his common sense and look at the facts, he or she will surely recognize the following:

a) How can a student, without any income, afford a large monthly premium?
b) How can a consumer, with modest means afford a large annual premium - when their total savings is just enough to pay one year's premium?
c) Why does the policyholder want to stop an existing policy and take up a new policy, when the policyholder is likely to suffer a financial loss?

Surely, something is amiss?

It is usually too late to act, when the policyholder makes a complaint, and it can come several years after the policy is taken.

The best time to act is at the time that the policy is issued. The insurance company can, as a matter or practice, get an officer to call the policyholder and check that he or she is aware about the actual terms of the contract.

If this call is made, any misunderstanding could be found immediately and the situation could be rectified. If the insurance company has such a practice, most of the misrepresentations and bad sales could be prevented.

Many years ago, I introduced this "call the policyholder" practice in the insurance company that I was in charge. I required the agent's supervisor to call the policyholder for each new policy that was issued, and verify that their understanding of the policy is exactly what it should be. The supervisors did not find any case of serious misrepresentations.

The sales general manager reported that the new sales dropped by 30 percent (if my memory served me correctly). My guess is - the insurance agents stopped the mis-selling as they knew that they would be caught quite soon. And this represented 30% of the new sales.

Any insurance company can stop the mis-selling by introducing a system to "call the policyholder to verify the understanding". But will they want to do it?

Well, the answer is "no". They will only do it when the regulator, i.e. the Monetary Authority of Singapore, require them to.

Tan Kin Lian

Increase CPF monthly payout from age 65

In addressing people who do not have the required CPF minimum sum, the government has to consider this question about how much they can be allowed to withdraw from the minimum sum from age 65:

a) Should the monthly withdrawal be reduced according to the available minimum sum and the payment be continued for 20 years or for life?

b) Should the monthly withdrawal be allowed at the level that is needed for their current needs, say $800 a month, although the minimum sum may run out earlier?

The government has chosen method (a).

I think a better decision is method (b). The retiree needs a minimum sum to survive from month to month. Their immediate needs are greater than their longer term needs.

They have to face a separate problem when their minimum sum is exhausted, but at least they can live adequately for the immediate future.

Tan Kin Lian

CPF interest rate has to be reviewed

One major source of unhappiness is the low rate of interest, i.e. 2.5% and 4%, payable on the CPF savings.

It is a wrong policy to invest the CPF savings in long term government bonds, which gives a low yield. As the savings are being invested for a long term, say more than 40 years, it is more appropriate to invest them in good quality shares which can give a better return compared to than government bonds.

The yield on good quality shares has averaged more than 8% per annum over the past three decades.

While the values of the shares may fluctuate from one year to the next, this fluctuation is immaterial for a long term investor. While some shares may turn bad, they can be compensated by the good performance of other shares. It is the average yield of the portfolio over the long term that matters to the CPF members.

The CPF members do not expect a yield of more than 8% per annum. But 2.5% and 4% is too low. A yield of 6% would be more appropriate and fair to the people, whose savings have been locked up for a long time.

There is a negative point about raising the yield or interest rate on CPF savings. This will also affect the interest rate charged on loans to buy HDB flats and other properties. The impact has to be considered when making a change. This issue may be difficult, even problematic, but it can be overcome.

It is time for the interest rate policy of the CPF to be reviewed. A higher return will ensure that the members will have more adequate savings for their retirement.

Tan Kin Lian

PM should seek an out of court settlement with Roy Ngerng

PM Lee must take heed of the strong support from ordinary people in Singapore towards the legal defense fund of Roy Ngerng. More than $70,000 were raised in just 4 days, surpassing the target needed to pay a good lawyer to defend Roy Ngerng.

If PM Lee continues with the legal action and wins the case in court and, if the court award the damages of $250,000 that he had asked for, what is likely to happen next?

I expect that the people of Singapore will come forward again and contribute the $250,000 in damages in full. And they will do so, with great anger against the person who is collecting this money. Even if it is donated to charity, it will still be the hard earned money of the donors.

And if that happens, it will surely be followed by a resounding defeat of the People's Action Party at the next general election.

What can PM Lee do now? He can remove the demand for aggravated damages and reduce his claim for damages to $10,000 - twice of what Roy Ngerng had earlier offered. And this is likely to be accepted by Roy Ngerng, leading to an amicable close to this case.

And this may turn out to be positive for PM Lee, as he will be sending a strong message that he is willing to listen to the voices of the people.

Tan Kin Lian

Give a better return on CPF savings

One source of unhappiness with the CPF is the low rate of interest paid on the savings, i.e. 2.5% on the ordinary account and 4% on the special account. The interest rates are so much lower than the actual return that is earned on the funds invested by Temasek Holdings and GIC.

This unhappiness is valid. It is wrong for the government to invest the CPF funds in low yielding government bonds, although they give the reason that the funds have to be invested securely.

The savings are invested for 40 years or longer. For long term investments, the correct investments are in good quality shares, and not in bonds. The difference in return can be as much as 4% per annum.

If the long term savings were invested mainly in good quality shares, the average yield over the past three decades would be more than 8% per annum, and not the 2.5% or 4% that were distributed.

While the values of the shares may fluctuate from year to year, the changes are immaterial to the CPF members, whose savings are locked up for a long term. They are not allowed to take out their savings prematurely, so the fluctuations in the asset values do not matter to them.

Even if some of the share investments turn out to be bad, they will be compensated by the appreciation in other shares. It is the long term average that count. And the long term average had been more than 8% per annum.

We do not need to expect a yield of 8% per annum. A yield of 6% would be fair. And if an adequate and fair yield had been given in the past years, the CPF savings would be much higher today, perhaps 50% more!

One important change to the CPF is to make the return more aligned to the actual yield that can be earned on quality quality shares.

Tan Kin Lian

Adopt a constructive approach

Sam Tan said:
Beware Fellow Singaporeans, It is PAP deliberate ploy to constantly provoke and attack WP in parliament to create DRAMA (corner WP to say and do wrong things) so that PAP can take these words/ actions against WP in next GE campaign ACCUSE WP for being an irresponsible/ destructive Opposition like those in other countries.

Hence convince Singaporeans to stick with a one party system so that PAP can control Singaporeans with their iron fists and implement all policies they want without consultation, debate and obstruction from Opposition and Singaporeans.

Remember this, every alternative policy/ suggestion has its pros and cons and PAP will attack the cons of whatever WP suggest and WP will never win the debate with PAP majority in the parliament. https://sg.news.yahoo.com/pm-lee-asks-low-thia-khiang--where-do-you-stand-180324245.html

REPLY
The pugnacious approach of our PAP leaders is not constructive. They set a bad example. 
They should be open minded to get the views of other people and seek a better solution to many of the "elephants in the room", i.e. problems that they have been ignoring or unable to solve for a long time.

Does the CPF Minimum Sum include the amount set aside for Medisave?

Someone asked:

I am curious about CPF Minimum Sum and Medisave Minimum Sum. If I am not mistaken, the Retirement Account compromise of Ordinary Account + MediSave Account + Special account once the person turns 55. So should not it be the minimum sum for CPF wef 1 July 2014 be $155,000 and out of that, $43,500 from the Medisave? Need correct interpretation please

REPLY
The minimum sum for retirement is $155,000 and for Medisave account is $40,500. Together, the total is $195,500.

Read
http://mycpf.cpf.gov.sg/CPF/my-Cpf/reach-55/Reach55-2.htm
and
http://mycpf.cpf.gov.sg/CPF/my-cpf/reach-55/Reach55-4.htm

Can a person earning $3,000 at age 25 meet the minimum sum at 55?

To answer this question, I present two scenarios:
a) Moderate salary increase. 
b) Low salary increase. 

The results can be found here:
http://c-onyx.com/page/1856

Analysis of CPF Life

THE FIRST EVER ANALYSIS OF CPF LIFE !!!

A CPF member reaching age 55 in or after 2014 will have the "minimum sum" portion of the CPF savings transferred to CPF Life. The member is given a choice of two plans, known as the standard and basic plan, which gives a monthly payout from age 65, payable for life, and a bequeath to the family on death. If the member does not exercise a choice, the default choice is the standard plan.

The standard plan has a higher payout than the basic plan, but give a lower bequeath to the family on death of the annuitant.

The PDF below contains an analysis of the payout and bequeath and helps the CPF member to decide on the choice of the plan to opt.

http://c-onyx.com/page/1851

Your CPF savings are safe

 I wish to address the issue on whether the CPF is able to pay off all its members, if it is dissolved today. 

The annual report of the CPF at 31/12/2012 showed total amount owing to CPF members to be $230 billion. This is invested in Singapore Government Securities totaling $229 billion, with a few other billions invested in other assets.

If CPF were to be wound up, will the government be able to pay the $229 billion?

The answer is clearly "yes". The reserves of the government comprises of $198 billion in Temasek Holdings, $305 billion in MAS and "over $100 billion" in GIC. The total is over $600 billion.

If this were to happen, will the government be able to sell the assets to raise $230 billion to pay the CPF members? There is no need to. If the government were to issue bonds of $230 billion, that is backed by the $600 billion of actual assets, it should have not much difficulty.

Another way is for the government to "print $230 billion" of money to pay back the CPF members.

The actual amount that the government needs to pay back the CPF members will be much less than $230 billion. The outstanding loans owed to the HDB (which is a part of the government) should be a large sum. Surely, if the government were to pay back the CPF balances, the members should also pay back the balance of the HDB loan?

If you wish to verify my figures, you can check them here:

The winding up of the CPF is completely hypothetical and inconceivable. I have used this scenario to illustrate that the savings in the CPF is safe, and that the fear that there is no money to pay back the CPF balance is totally unfounded.

However, I do not support the current system where most of the savings are stashed away by an ever increasing minimum sum. This has to be reviewed, and a portion of the savings should be allowed to be withdrawn at age 55, even if the savings is inadequate to meet the minimum sum.

Tan Kin Lian

Easy way to mark tests and examinations

We have developed a software to allow teachers to mark OMR answer sheets easily. It has been used a few times and several practical issues have been identified. These issues have been resolved, and the software is now quite easy to use.

The attached PDF shows an example of the use of this software. If you are interested to try the software, you can contact us using the e-mail shown in the PDF.

If you have encountered difficulty using the OMR equipment provided by your school, you can try this software and see if your issues have been resolved. As this software is convenient to use, you can use it for your regular tests and quizzes during the term, in additional to the final examination at the end of the term.

http://c-onyx.com/pdf/1849