Tan Kin Lian's Blog: Reason for Restructuring of Bonus

Sunday, June 01, 2008

Reason for Restructuring of Bonus

If you like to know Income's reason for the restructuring of bonus, you can read their statement in their website: http://www.income.com.sg/

Here are some key points from the press statement issued by Income:

> We will work always with customers’ interests at heart. Every decision we take is calculated to protect their interests individually and as a whole. What we seek to do is to deliver the best possible returns to policyholders, now and also in the future.

> Although special bonuses are not guaranteed, they are set to ensure that the reduction in annual bonus is fully compensated. Where the strength of the Fund and investment outlook permits, this will continue in future. Should this compensatory special bonus reduce in future due to poor investment conditions, we are committed to restoration when conditions improve.

> We will ensure that the bonus allocated to policyholders result in payouts which are fair and consistent with the experience of the fund.

I remember that these points are also reiterated in the speech given by chairman Ng Kee Choe at the annual general meeting. I believe that his full speech will be posted in the website over the next few days.

7 comments:

Weng Mao Fa said...: JT said: "I do not understand why...".

MS said: "I urge you to continue to lodge the Collective Protest."

Policyholder are not convinced after AGM !

Figure and facts speak louder than promise. Can Mr TKL on behalf of policyholder request NTUC INCOME to show a Projected Profit & Loss Statement for next 3 years? Thanks.; June 01, 2008 11:46 AM
Pete said...: I find it puzzling that Income said that the yield is unsustainable and they cut the bonus to 1.3%. I bought a policy for my wife in 2003 when my insurance adviser told me that Income is a cooperative and that strengthened my belief to buy one from Income. Now that trust has been betrayed. If the yield is unsustainable, is Income saying that all other insurance cos are unable to sustain it also. The annual yield is only declared when all other costs are being deducted. I understand that in certain years the yield may be negative but we as policyholders are looking at the long term, of at least 20 years for the average returns to be in the region of 5 - 7%. If Income wants to pay only 1.3% every year, if for that year the yield is 5%, what is Income going to do with the difference of 3.7%? The compounding effect of this nett 3.7% over 20 years can be very substantial. And how would policyholders know how much every year they have earned if they are only being compensated when they surrender or a claim is made. Is there transparency? Already the true cost of insurance is exorbitent and now they still want to cut bonus rates! If they are all out to suck policyholders then in the long run, it will be only the insurance cos which will suffer, as nobody can be convinced to pay for a high cost for a small coverage.; June 01, 2008 1:36 PM
blueoceans said...: Regarding the key point that "Although special bonuses are not guaranteed, they are set to ensure that the reduction in annual bonus is fully compensated. Where the strength of the Fund and investment outlook permits, this will continue in future. Should this compensatory special bonus reduce in future due to poor investment conditions, we are committed to restoration when conditions improve.", to convince the policyholders that this is not just mere talk,Income should start to restore the annual bonus cut in the past years.....; June 01, 2008 2:13 PM
blueoceans said...: One key point of the Income's press statement says "There is now a better chance for NTUC Income to not only deliver returns as illustrated to policyholders, but to deliver even better returns."
We need to know what time frame Income has in mind that the returns will be better? 5 years? 10 years? Or more?
If it is envisaged that the returns will be better after a minimum of 5 years, say, then existing bonus structure should continue for at least 5 years, etc....; June 01, 2008 2:26 PM
zhummmeng said...: The letter to policyholders said that the combined return will not change with the restructuring.Even the chart showed the same. Now they are saying that it may be better return. How much better? Double? Is it because of much criticism that the new management decided to change 'same' to the word 'better'? For what? to allay the fear of higher risk the policyholders are asked to take?Why take higher risk when it is not compensated adequately? Now, this is not truthful, NTUC is unsure. There is no commitment, no confidence. The whole saga is full of contradictions and press statements made were not consistent.; June 01, 2008 3:24 PM
Raymond T said...: It could be that Mr Tan did not get his 1000 signatures that he has stood down his collective protest. NTUC should allow the policy holders to have a say and choice.; June 01, 2008 10:44 PM
Tan Kin Lian said...: hi raymond t

The final count is 670 signatures for the collective protest.

The only reason to drop the collective protest is getting the assurance to the two concerns.

I think that the assurance on getting bonus that reflect the actual experience is very important. It allows us to ask for the past cut in bonus to be restored, due to the good invsetment yield during the past years.

I shall be focusing on this goal. The assurance on payment of the special bonus is satisfactory.; June 02, 2008 5:35 AM