Saturday, May 09, 2009

Promises made at the NTUC Income AGM in 2008

Extract from speech by chairman of NTUC Income at the AGM
  1. Some policyholders have raised specific concerns on the special bonus in blogs.  Allow me to address them.

    • While special bonuses are not guaranteed, they are designed to ensure that the reduction in annual bonus is compensated.  As I have indicated earlier, the new bonus structure is aimed at improving, the total payout to policyholders.

    • Should the special bonus in future reduce due to adverse financial conditions, we are committed to restoring it when conditions improve.

    • I have stated that this Board will look after the policyholders’ interests. Towards this end, the Board will ensure that the bonus allocated to policyholders result in payouts is fair and consistent with the experience of the Life Fund. 

NTUC Income's Bonus Cut

Dear Mr. Tan,
At last year's general meeting, the chairman of Income made certain promises to policyholders concerning the bonus cut. He said that bonuses will be declared based on the actual experience of the fund. Do you intend to ask the chairman about the steps that have been taken to declare fair rates of bonuses? It seems that Income knows how to cut bonuses and to spend money to give more incentives to insurance agents? What about giving a fair return to policyholders?

I am in Canada now on a 3 week vacation. I will return to Singapore just before the annual general meeting. I have asked to attend the meeting which will be held on Friday 29 May.

I like to ask policyholders who are unhappy with the bonus cut to attend the annual general meeting and post the questions to the board. I have labelled my blog postings on the bonus cut separately. Click on the label "NTUC Income Bonus Cut".

The statement by the chairman at last year's AGM can be found here. NTUC Income's FAQ on bonus cut is found here.

Can policyholders help to identify the questions to ask the chairman at the AGM to be held on 29 May?


Scenes from Vancouver, Canada

Chinatown in Vancouver - second largest Chinatown in North America (after San Francisco).

Tulips in bloom in Vancouver. 

Skyline of downtown in Vancouver.

SCMP:Sanctions loom in Lehman investigation

The Monetary Authority is one step closer to sanctioning those guilty of misconduct in 48 cases that involved the sale of Lehman Brothers-linked investment products.

It had concluded its investigation into the 48 complaints and was considering disciplinary action, the authority said yesterday.

But it would decide on what action to take only after it had heard from those against whom the complaints were lodged.

"A number of cases are at a very advanced stage of the enforcement process. Before making a final determination in these cases, we have to go through due process to ensure fairness, including giving the subjects of investigation an opportunity to be heard," it said.

If found guilty, an executive officer of a financial institution could be withdrawn or suspended from office, and a financial practitioner's registration could be removed or suspended under the Banking Ordinance, an authority spokesman said.

An institution could have its registration revoked or suspended by the Securities and Futures Commission, be subject to a reprimand, a fine or a prohibition order. Employees of the firm who were involved could also be similarly sanctioned.

Some 48,000 Hongkongers lost most of the HK$20 billion they invested in credit-linked derivatives, such as minibonds, issued or guaranteed by Lehman Brothers when the US investment bank collapsed in September. Many of them have accused financial institutions that sold them the products of misconduct. By Thursday, the authority had received a total of 20,913 such complaints.

Hours before the announcement the authority's chief executive, Joseph Yam Chi-kwong, told a Legislative Council hearing that mis-selling was inevitable because of the variable quality of bank employees.

Responding to criticism by financial services legislator Chim Pui-chung that the authority had not fulfilled its regulatory duties, Mr Yam said: "It is like crime ... always exists in the society. Are law enforcement departments responsible for that?"

The authority recently hired 40 more employees to handle complaints of mis-selling, he said, and would continue its recruitment to raise the current number of 243 officers to 300.

Peter Chan Kwong-yue, chairman of the Alliance of Lehman Brothers Victims in Hong Kong, welcomed the possible sanctions in the 48 cases.

Mr Chan also said the alliance was arranging a meeting with the Bank of China (Hong Kong) to discuss compensation.

In yet another protest, dozens of investors stormed the Citibank headquarters in Central in the afternoon. They were removed by police in the evening.

Perils of global banking

Dear Mr. Tan,
This article shows how global banks have packaged toxic products to be sold to investors. Please highlight this in your blog.

Friday, May 08, 2009

Electric powered vehicle

Singapore is spending $20 million to test the use of electically powered vehicles. I have a suggestion to expand the scope of this project and develop a better system, based on the concept of "personal automated transport". Read here.

Pleasant weather in Vancouver, Canada

The weather in Vancouver, Canada, is pleasant, around 5 to 10 degrees Centigrade. It is cold, but not harsh. 

A Singaporean that migrated to Canada 15 years ago told me that he enjoys the weather in Canada. When he returns to Singapore occasionally to see his mother, he finds Singapore's weather to be too hot and humid. 

He said that many Singaporeans who have lived in temperate climates for 10 years or longer share the same opinion.

Low Job Satisfaction

Read my articles and the comments in The Online Citizen.

Lower alert level for Influenza A (H1N1)

I appreciate the decision taken by the Minister for Health in reducing the alert level for Influenza A. It is a bold decision to recognise that the threat is not serious, at least based on the information that is available now.

There is still a small risk that things can turn worse. When that happens, it will be appropriate to raise the alert level. I hope that this will come to pass, similar to other health concerns that have surfaced in recent years. 

We do have many big challenges to worry about,  such as restoring the health of the global economy.  We should not divert our attention to other matters that are not serious at this time.

Someone mentioned that Influenza A could be a black swan event. Really? There are other black swan events that could occur, such as an earthquake, terrorist attack or nuclear explosion.

Tan Kin Lian

Thursday, May 07, 2009

Strong recovery in Singapore stockmarket

The Singapore stockmarket recovered by 50% from 1400 to 2100 (on the ST Index) over the past two months.

I did not buy any shares during this period, so I missed the rally. But I did not sell any shares either, during the decline from 2400 to 1400. So, they cancelled out.

This illustrates the importance of staying invested, for a long term investor. If one gets out of the market, when conditions are gloomy, one is likely to miss the rally. It is difficult to time the market. It is better to invest for the long term, and take a long term view.

Even the experts like Warren Buffet adviced investors to take a long term view and invest over a time frame of 10 years or longer.


I will be in Alaska for the next three weeks. I may not be able to access my emails or the internet during part of this period.

Wednesday, May 06, 2009

Survey: Competition and Fair Trading

When we buy a car, we have a competitive market giving a large choice of car models. After buying the car, we have to approach the manufacturer for certain special parts, e.g. a replacement electronic key. The manufacturer does not allow other people to provide the key.

What is a fair price to pay for the car? Is it $30, $300 or $3,000? A non-electronic key can be made at a cost of $10. An electronic key is more expensive, but is $300 or $3,000 fair? If some manufacturer can make an electronic key for $150, should another menufacturer charge $300 or $1,000? 

Is there any party responsible to address complaints of consumers? 

Give your views in this survey.

Here are the survey results.

Tuesday, May 05, 2009

Are bonuses declared fairly?

Dear Mr Tan,
I have come to realise my folly in buying substantial insurance for myself and family ranging from endowments, whole life, etc. All along, I am told buying insurance is also saving for the future - how wrong I have been. Now I am aware that term life is still the best in terms of value. Now I have to consider how to handle the current policies that I have, especially those where I have to pay for "life".

Last month, I received a Bonus Notice that informed me of the reversionary bonus for 2008 (Endowment policy). I was told that "Due to current market conditions, your Projected Matuity Value at this point in time is revised to $71,491 from $87,786. This revision is done to reflect the reduction in value of the fund's assets."

I bought this policy in 1997. The yearly premium of $1,400 is deducted from my CPF OA account. At that time, the projected return is much more than if I leave the money in CPF. In Feb 2008 that I was told the projected maturity value is $87,786, with a yield to maturity of 4.41%.

In one year, I am now informed of this drastic reduction in just 2 sentences. What I cannot comprehend is the way life insurance company is able to decide unilaterally whatever value they want to reduce even when it affects the insurance buyers so much. In that case, the insurance buyers always lose, insurers always win.

In good times, the insurers make money, then in bad times, the insurance company still make money by just reducing bonuses on the insurance policies. There is no equity. Will you help me to understand why this is so?

The question that you asked has troubled me a lot in the past two years.

When I was in charge of NTUC Income, I made sure that the policyholders are given a fair deal. In bad years, the bonus are reduced, but in good years, the bonus are increased.

I now get the impression that many insurance companies are not practicing a fair approach in treating their policyholders.

I suggest that you should raise your question with MAS or with the Consumer Association of Singapore (CASE) and see if they are willing to take up this point as a matter of public interest or consumer protection.

SCMP: Minibond meetings

Minibonds meeting. About 50 investors who suffered losses after buying Lehman Brothers' minibonds protest at the Hong Kong Association of Banks in Central yesterday. They asked to meet association chairman Peter Wong Tung-shun, and their five-hour protest ended after the association agreed to arrange a meeting between the two sides on Thursday.

China Daily: are leaders retired?

"Public interest would not be adequately served by making known the names of the redundant leaders. It is more important to publicize where the dismissed leaders are placed.
Otherwise, there is every risk of the ejected excess being placed in positions elsewhere. The process calls for the utmost transparency.
Once a leader, always a leader until retirement, seems to have become a tacitly prevalent rule. As a result, quite a number of people do their best to get promoted not for doing a better job but for the benefits of the position.
Leadership entails not only benefits but also accountability. Unless the principle of acountability is enforced, just trimming the flab will neither raise efficiency nor make leaders discharge their duties in a responsible manner."

May the rulers be righteous

Dear Mr. Tan Kim Lian, 

While I am inspired by your selfless effort to embark on the mission of educating Singaporeans on issues relating to insurance, financial investment and current affair, I think it is a matter of dire urgency to educate Singaporeans on the importance of political awareness. This will decide if Singapore as a society has a bright future. 

For too long, the ruling elites have successfully succumbed the population into political apathy through undemocratic oppression, threats of litigation and many other shrewd social engineering strategies. At the same time, the past few decades have seen economic prosperity largely because of the world economy and the hardworking culture of the local population who just wanted to earn a decent living. This complacency with a good life of the population has encouraged the ruling elites to justify their one-party rule by advancing the fallicious argument that the "too-good" life Singaporeans are enjoying cannot afford a two-party system and instilling the fear of not having the right talents to run the country, except those handpicked by the founding father. 

This politcal apathy is a "killer" for the well being of Singapore. Foremost is to educate Singaporeans that a policy decided and implemented by the ruling elite, without thorough debate, discussion and scrutiny by the citizens, could end up having a disastrous impact on the future generations. This is not always felt immediate or the near term but until many years later. Some good examples are the elitist "graduate mother scheme", "the stop at two scheme", "Speak Mandarin scheme suppressing the proliferation of dialects", the victimisation of "Nanyang University" for political motive, and even the use of CPF for investment and housing has now become a constant concern for retirement. 

Therefore, I urge you to focus your effort on educating Singaporens to speak up politically. Do not be complacent with the "good" life we have had, we must continue to play our part as responsible citizens and in all fairness to our children, our children;s children, to monitor, scrutinise and question polices mandated by the ruling elites. Singaporeans have to become aware that the ruling elites are not messiahs, saviours, gods, otherwise we would not have the current financial crisis we are going throught right now with the huge GIC and Temasek looses of monety belonging to Singaporeans. 

Monday, May 04, 2009

Available for rental: Thomson View #17-xx

This 2 bedroom apartment (1,300 sf) is available for rental in May 2009. Monthly rental $2,100. View details. Interested? send email to

Insurance company disallow revival of policy

A friend approached me for help. He took a policy more than 10 years ago. Recently, he overlooked to pay his premium and his policy "lapsed". He wanted to revive the policy after one year, but was told that this is not allowed.

I asked him to get the reply in writing. From my understanding, a policy should be allowed to be revived within a few years, as long as the policyholder is able to provide evidence of good health. In this case, the lapsation was due to an oversight, due to poor service by the agent and the office in not reminding the policyholder.

In the policy condition, there is a provision for an automatic premium loan or for a paid up policy. These options should be explained to the policyholder. It was not done, as my friend was not told about them.

Sometimes, the agent wanted to get the policyholder to take up a new policy to replace the old policy. This could be a reason why they said that the policy cannot be revived.

In my friend's case, he called the office. I wonder if the customer service office is also adopting the same approch, to get the policyholder to take up a new policy? If this is the case, it will be unethical and against the interest of the policyholder.

This could be another example of taking the policyholder "for a ride". By getting the reply in writing, it will be possible for the policyholder to lodge a complaint with FIDREC or with MAS. 

Tan Kin Lian

Advice from three religion on how to handle debt

Read this.

Terminating existing policies

Dear Mr. Tan,
I read in your blog that you have cancelled a few NTUC policies recently. Can you explain your reasons?

I have stopped full time work and my children are grown up. I do not need the coverage under the life insurance policies now.

I could keep the policies as an investment, but I found the return to be quite low. In recent years, the investment yield has been rather low and the expenses incurred by the NTUC Income  have increased significantly. This has resulted in a severe cut in the bonus rates payable on the policies.

Even in a good year (e.g. 2007), the bonus distributed has not been commensurate with the good results. I have lost confidence in getting a fair return and have decided to terminate most of my policies.  I can get a better return by investing on my own or in a low cost unit trust.

Contractor Particulars

I need your help to provide particulars of contractors (e.g. plumber, electrician, air con, refigerator, repairman, etc) that you use regularly or who have dropped flyers into your letter box. I wish to invite them to join a Contractors Portal. Please enter the details here.

Sunday, May 03, 2009

Are we over-reacing to Influence A (H1N1)?

The World Health Organisation has raised the alert level for Influenza A (previously called swine flu) to 5. When it moves up to level 6, it is a full blown pandemic.

A pandemnic meams that the infection has spread to all the continents. But the fatality rate of the infection is still quite low at this time. Not many people die from Influenza A. More people died from ordinary flu than from Influenza A.

Two doctors told me that the measures being taken, such as wearing masks, are not necessary at this stage. It is more important to wash the hands to remove the virus.

A few friends have cancelled their overseas holidays, losing the money that they paid for the tours. It is rather wasteful and the risk is quite low. Perhaps, they are alarmed by the coverage in our newspapers and the advisory given by our Government.

President Barack Obama said that "We should be concerned, but not alarmed". By all means, take some precautions, but do not over-react in implementing the harsh measures - unless things get much worse than now.

Tan Kin Lian
Additional points: 
The fatality level of Influenza A is 3%, compared to 65% for avian flu. More details here.

Latest update: 4 May 
Report from Mexico said that there were only 19 confirmed deaths from Influenza A, instead of nearly 200 deaths reported earlier (which was over-stated). Less people are now infected.  

Is Singapore over-populated with foreigners?

E-mail sent to me

There is no denying that every 1st world country needs foreigners to supplement its citizens to help drive its economy. BUT, is Singapore over-doing it?





Norway (2008)




Finland (2008)




Singapore (2006)




Singapore (2008)





Unfair treatment of policyholders

I have received many requests from policyholders seeking advice on the problems that they encountered with their insurance company and what they can do. They are caused by unfair administrative requirements or commercial decisions taken by the insurance company. 

My general impression is that the policyholders have been badly treated by the insurance company and have been made to lose money as a result of the unfair treatment.  

I advise them to lodge a complaint with FIDREC. The website is If they need advice on how to lodge a complaint and is willing to pay $500 for the assistance, I can recommend someone to handle it for them. If they know how to handle the complaint on their own, they can save on this cost.

I am very sad to see so many consumers being badly treated by the financial institution. The situation seems to be getting worse in recent years. I hope that the Monetary Authority of Singapore will carry out an investigation into the practices of these financial institutions. 

Tan Kin Lian

Surrender of AIA poilcy

Dear Mr Tan,
I have a AIA financial guardian policy purchased in 1990. My premiums are paid annually all these years. Last year, I decided to surrender the policy. I sent the form through the mail, as the former insurance agent has long left the company.

Two months later, I received a letter from AIA informing me that the unpaid premium has been advanced as a policy loan. The customer service hotline told me that I needed to put up a Request to change the payment of the premium to quarterly mode so that they can refund me on pro-rated basis of the APL amount.

Please advise me what action I can take against AIA if they still insist that they did not have the change of request form and refuse to refund me the pro-rated amount of the loan outstanding that they have deducted.

It is not fair for the insurance company to impose administrative barriers that will cause you to lose money. You can lodge a complaint with FIDREC. See

Worried about AIA's future

Dear Mr Tan,
With the current news about AIG I would greatly appreciate your advice on whether I should continue to pay my insurance for Basic Life and Financial Guardian policy with AIA which is due to mature in March 2046.

Would you pay the premium if you were me? Does MAS guarantee any payment for insured products? The policy has been in force for more than 10 years.

I suggest that you ask for information about the cash value now and in 5 years time. You can compare the premiums that you will pay for the next 5 years. You can decide whether to continue with the policy. Read my FAQ.

Regarding the security of AIA, you do not need to be concerned about it. AIA policyholders are covered under a separate insurance fund in Singapore. It is also protected by the policyholder protection fund.

You can search my blog for the past articles on this matter. Search "AIA" and see if you can find any of the articles.

Financial Guardian - a difficult decision

Dear Mr. Tan,
I purchased a life policy known as 'Financial Guardian' from AIA in 1993. My understanding from my insurance agent then was that the policy has the concept of 'critical year' where the policy will be 'self paying' from the critical year onwards, and this critical year is around the 13th year after the start date of the policy.

Recently, I received a package from AIA which listed two options which I have to choose one of them. It seems that the accumulated dividend is not sufficient to fund future premium payments after the critical year.

Option 1 is for me to continue paying the premiums. Along with this option, I have to declare that "I understand that dividends and the critical year are not guaranteed and there is both upside and downside potential depending very much on the investment experience of my policy. However after due consideration, I elect to contimue paying the premiums."

Option 2 is to stop paying the premiums. For this option, I have to agree that "I understand that accumulated dividends and interest earned will be used to fund future premium payments for my policy in accordance with Option 2 "Premium Reduction" of the Dividend Options as provided for in the policy contract.

I also understand that once/if accumulated dividends and interest are exhausted, I will have to:
* restart paying my premiums; or
* convert my policy to Reduced Paid Up status; or
* take a loan advanced against the cash values of my policy for payment of premiums for my policy.

I understand that interest at such rate as may from time to time be stipulated by AIA will also be charged on this loan. I also understand this loan will be offset against any benefits paid from my policy."

For Option 2, it also mentioned that any supplementary benefits attached to it will be terminated when my policy is converted to a paid up policy.

Could you please advise on which is the better option to choose?

For each of these options, could you please highlight what are the disadvantages/pitfalls that I should consider before making my decision?

What does it mean by my supplementary benefits would be terminated when my policy is converted to a paid up policy for Option 2? Is supplementary benefits referring to the riders?

With AIG going thru' financial crisis and requiring bail-out in the USA, is it advisable for me to choose Option 1, ie to continue paying the premiums? Or should I elect for Option 2 now and then wait and see how AIG/AIA rides out the current financial crisis?

Looking forward to hear from you. Any advice that you could provide in this area, would be very much appreciated.

Please get advice from the AIA agent or their company. You have to decide based on your needs.

Here are some general remarks. It is better to take option 1 and continue paying the premium. Under option 2, you are probably charged a high interest rate (perhaps 6% ore more) for the loan that is taken to pay the premium. Why pay a high interest rate on the premium loan?

I think that AIA should be quite safe, as it has a separate life inurance fund protected under Singapore law. It should be sheltered from the problem of AIG.

Critical year offer - seek advice from CASE

15 years ago, my father bought me an AIA insurance with critical year feature.

Now, AIA has mailed me to choose 2 options - 1) continue premium 2) pay from dividends till zero then start cash payment ago. Alternative is 3)support program, but no explanation whatsoever 4) adjudication.

If I don't choose, it will be taken as I were to accept AIA position. I am confused which is the better option. I was hoping for someone to initiate class action, but till now none forthcoming. I would like your advice on this.

I suggest that you consult the Consumer Association of Singapore, CASE.  They have handled many of these cases i n the past.

Wrong advice about bonuses

Hi Mr. Tan
I was misled into buying insurance for all these years, thinking that the lump-sum amount paid to insurance will be like fixed deposit, and that once bonuses are declared, the surrender value in the benefit illustration shown will be guaranteed.

I did ask the agent about the guaranteed and non-guaranteed part but the answer was to look at the surrender value shown in the BIPS, which she claimed will be payable to me on surrender.

I have now found out that the terminal bonus and future reversionary bonuses are not guaranteed, which was not advised to me. Please advise me if I got a case against them.

It is the duty of the agent to advise you correctly. If you were mis-informed, you should take the following steps:

a) Lodge a complaint to the management of the insurance company, giving facts about the mis-representation by the agent

b) If the insurance company does not give you a satisfactory solution, you can lodge a complaint to FIDREC. Details are in If you need legal or other advise, you should be willing to pay $500 for someone to advice you. I will not be able to look into your complaint, as it takes a lot of my time.

Blog Archive