Consumers who deserve to be ripped off

I have often been asked to give my views on whether a specific life insurance policy is worth buying. It is quite inconsiderate for consumers to ask this question to me, and I often feel like telling them off.

If they take the trouble to attend the talk on Financial Planning and spend $30 and 3 hours, they will get to know why most of these policies should be avoided, and more importantly, what are the better ways to invest their savings.

A typical example that I have quoted many times is as follows:

If you save $500 a month over 35 years and earn an yield of 2.5% per annum on the life insurance policy, you will get around $300,000 as cash value at the end of the period. If you invest the same money in an exchange traded fund that is invested according to the Straits Times Index, you are likely to get about $500,000.

By investing in the life insurance policy, you will be giving away $200,000. You can get an accident or term insurance policy to cover $300,000 by paying an annual premium of $360 or less. Over 35 years, you will spend only $40,000 (including interest lost), but you can save $200,000.

The consumer should ask the insurance agent to tell them about the distribution cost of the policy. This is shown in the benefit illustration and could be $10,000 or more. This is the money that is taken away from the consumer to pay commission to the agent and other parties in the distribution chain.

 Here is the irony. If the consumer buys the insurance policy from the insurance agent, he (or she) is giving away $10,000 for a bad investment product. The consumer now wants me to spend the time to explain why they should not buy the policy, and experts to get it for free.

Sometimes, I recommended to the consumer to approach a fee-based financial adviser (and I gave a list of people that they can contact). But, in most cases, the consumer does not want to spend $200 or so, to pay the adviser.

Do you think that our consumers deserved to be ripped off, for being lazy and for being ungrateful?

Consumer can attend the talk on financial planning organized by FISCA, and other talks on investments by registering at http://easyapps.sg/assn/Org/Event.aspx?id=5

They can buy my book on financial planning and life insurance at www.tankinlian.com/ishop.

They can get the advice from a fee-based financial adviser here:

http://easyapps.sg/assn/Org/Information.aspx?id=5 (Click on FISCA Assistance category)

They can also give away $200,000 by buying a bad life insurance policy. They do not need to spend $30 (for the talk) or $200 for the fee-based advice.

Tan Kin Lian

Charges for writing a standard will

If you wish to know how much a lawyer charge for writing a standard will, and which lawyer offer this service at a low fee, login to www.fisca.sg (the information is available only to FISCA members after login).

Big time gamblers

It is sad to see banks continuing to gamble on a big scale. They should be banned from all types of gambling - or what is called by the nicer term of "trading".

http://www.cnbc.com//id/47377555

Singapore can learn from Hainan

Hainan used to send their top officials to learn from Singapore. Now, it is time for Singapore to learn from Hainan on how to deal with the big income gap. http://singaporedesk.blogspot.com/2012/05/learning-from-hainan.html

A democratic society based on justice and equality

Please attend this event in Hong Lim Park on 19 May.

MARUAH is commemorating the "25th Anniversary of Operation Spectrum", an outdoor exhibition themed - That We May Dream Again. Remembering the 1987 ‘Marxist Conspiracy’ - will be held from 3pm to 7pm on Saturday 19th May, 2012 at Speakers’ Corner, Hong Lim Park.

http://www.google.com/reader/view/#stream/user%2F08003848054417725788%2Fstate%2Fcom.google%2Freading-list

MAS relax rule on some financial products

It is likely that investment in some exchange traded funds, such as the STI ETF that has been recommended by me, will be allowed in a few months time, without the need for the investor to pass a knowledge test. This is classified as "collective investment scheme: mentioned in this report. However, we still have to wait for the details to confirm the actual situation.
http://www.todayonline.com/Business/Businessinbrief/EDC120510-0000077/Singapore-relaxes-rules-on-selling-investment-products

Common sense solutions

It is quite common for Singaporeans to develop a convoluted approach when a common sense approach would be more appropriate. Here is an example, as seen from a foreigner.
http://www.todayonline.com/Singapore/EDC120509-0000152/Foreign-train-experts-recommend-fairly-common-sense-solutions

Blue Chip Shares and REITS in Singapore - May 2012

I have uploaded the fundamental data on the top 25 blue chip shares and 15 REITS in Singapore, sorted by dividend yield into the FISCA website (available to members after login). I am surprised that many of these shares have quite attractive dividend yields that are higher tahn 4% p.a.
FISCA website: www.fisca.sg.

A country of extremes

Eddy Blaxell said...

This is a fabulous article. One of the hardest-hitting pieces I've read about the current state of Singapore and the incredibly absurdities within it. What makes it all the more amazing is that you hardly needed to say anything at all - the facts speak for themselves.

Singapore : A country of Extremes

Business lessons form the Godfather

Hi Tan,

 We just posted an article, “The 9 Best Business Lessons From The Godfather”( http://www.onlinebusinessdegree.org/2012/05/07/the-9-best-business-lessons-from-the-godfather/). I thought I'd drop a quick line and let you know in case you thought it was something your audience would be interested in reading.

Progressive Tax Rates

I agree with the views expressed by Calvin Cheng in this letter published in the Straits Times. We need the higher income earners to pay more tax, so that the state has sufficient money to take care of the poorer sections of our society.

http://www.straitstimes.com/STForum/Story/STIStory_796334.html

At the same time, we should also introduce a minimum wage. Although the small business owners may find it difficult to cope initially, they can adjust. Eventually, rental rates have to come down, when their profits are squeezed.

Remembering the 1987 "Marxist Conspiracy"

Mr Tan
I have taken the excerpt from this website: http://remembering1987.wordpress.com/
Please post into your blog

"“Operation Spectrum” was mounted by the Singapore government on 21 May 1987 under the ISA. Sixteen individuals were arrested in the first wave, with another six detained soon after. Two of the lawyers (including a former Solicitor-General of Singapore) who represented these individuals were subsequently detained as well. The 24 arrested were mainly professionals such as lawyers, journalists, community and church workers and entrepreneurs.

The government alleged that the detainees were ‘Marxist conspirators’, without giving them the right of defence in an open court. Instead, public “confessions” were elicited under the threat of indefinite detention without trial. 

These “confessions” were repudiated in a press statement by nine of these individuals some months after their release.  Eight of them were immediately re-arrested the next day, while the ninth signatory was in England at the time of re-arrest. 

Nothing substantial or credible was ever produced to corroborate the government’s allegations. Later documents showed even greater ambiguity in the reasons behind the detentions in 1987. An injustice was perpetuated and continues to linger to this day. 

Function 8 Limited and MARUAH as well as other civil society organisations, have come together as partners to remember the 25th anniversary of Operation Spectrum through a series of activities.

A session themed That We May Dream Again. Remembering the 1987 “Marxist Conspiracy” will be held from 3pm to 7pm on Saturday 19th May, 2012 at Speakers’ Corner, Hong Lim Park.

Amongst other activities, survivors of the 1987 ‘Marxist Conspiracy’ will be sharing  stories of their lives before and after their detentions with members of the public."

Watch this Youtube
http://www.youtube.com/watch?v=4ekkGm1C9Vs&feature=youtu.be

Website
http://remembering1987.wordpress.com/

Suggestions to improve Eldershield

1 May 2012

Editor, Forum Page
Straits Times

Elderhield is the long term care insurance promoted by the Ministry of Health. It now provides a monthly payout of $400 for up to 72 months, to an insured person who has been medically assessed to be unable to perform at least three out of 6 specified activities of daily living.

The monthly payout of $400 is clearly in adequate to meet the cost of employing a care giver at home or to put the elderly in a nursing home.

The Minister of Health said that he is going to review the current scheme. I wish to suggest the following points for his consideration:

a) The Ministry should continue to play an active part in setting the framework to ensure for the fair treatment of  consumers and for the fair assessment of eligibility for a payout. The claim payout rate, compared to the ctuarial estimate, should be published.

b)  The Ministry should carry out regular audits to ensure that the insurance companies are pricing the insurance product fairly and are not making excessive profits by over-charging the consumers, or are reckless in under-pricing their product, leading to the prospect of insolvency.

c) The Government should consider giving a fiscal incentive to encourage the public to increase the amount of coverage on a voluntary basis. This can take the form of (say) a 30% subsidy on the cost of the long term care insurance. If consumers need to pay only 70% of the actual cost, more people are likely to come forward to buy the supplementary insurance and encourage insurance companies to compete for this attractive market.

In many countries, the Government has found that some form of tax or fiscal incentives is helpful to develop the insurance market and to overcome the resistance of consumers to set aside money for their future needs. Singapore should follow the experience of these countries, in order to get our citizens to plan for their future needs.

Tan Kin Lian

Educational Talks by FISCA

Hi Mr. Tan,
I am your loyal reader. just want to ask if theres any platform that we can track on your retirement talks on investment and managing money. thanks! (;

REPLY

You can track here
http://easyapps.sg/assn/Org/Event.aspx?id=5

Poor return from life insurance policy

4 May 2012 


Editor

Forum Page

Straits Times

I refer to the letter by Ms. Pearlyn Koh. It is quite improper for her to describe my views as being over-simplistic.

Ms. Koh mentioned that the cash value of a traditional life insurance policy may be "a life saver" when a policyholder needs cash for certain emergencies. 

She must have assumed that the policyholders are not able to invest the savings in other suitable forms of investment and that life insurance is the only available choice. This is a bad assumption. 

A typical life insurance policy reduces the yield by 2% to 3% compared to the yield that the policyholder could have earned when the savings are invested in a more suitable investment plan, such as a low cost, well diversified investment fund.

Over a period of 35 years, a reduction of 2.5% in the yield could mean that the life insurance policy pays 40% less than the alternative investment plan. Instead of getting a payout of (say) $500,000, the cash value from a life insurance policy could be 40% or $200,000 lower. This is a lot of money to give away. 

Too many policyholders are getting a poor return on their life insurance savings and are not having sufficient money for their retirement needs, in spite of being prudent in saving for their retirement.

While the life insurance policy does give a higher payout if death occurs in the earlier years of the policy, this risk of premature death could be covered under a term insurance or accident insurance policy at a much lower cost to the policyholder.

A large part of the reduced payout from a life insurance policy represents the high commission paid to the life insurance agent and the agency managers and the profits of the life insurance company. 

Due to the conflict of interest faced by life insurance agents selling high commission products, it is not possible for consumers to rely on the advice of the agents. I recognize that some life insurance agents do act professionally in the interest of their clients, but the risk of consumers being misled by unethical agents is real and should be addressed. 

This is the reason why the it is timely for the Monetary Authority of Singapore to set up the Financial Industry Industry Review (FAIR) panel.

Tan Kin Lian
President
Financial Services Consumer Assocation

Difficult to make an internet banking payment

I used DBS IDEAL (corporate e-banking) to make a payment to a payee with a UOB Bank Account. I had to find out the bank which is 7375 and account number 101-XXXXXXX. I was asked to enter the bank code and branch code, which I assumed to be 7375-101. The DBS IDEAL system rejected it saying that this combination is invalid. I checked and tried again and was rejected.

My staff called DBS who replied that it is an issue with UOB. So, I decided to abandon the internet payment and wrote a cheque. Later, my staff called the client and found that the branch should be 001.

Why should our internet banking system to be so complicated. Surely, they should just accept the bank code and account code and pass the details of the transaction to the payee's bank to sort out internally on its branch code?

In the meantime, I will ask the payee to give me the full code for the bank (4 digits), branch (3 digits) and the account code (number of digits vary according to each bank). It is important for our banking system to sort out the complications and make it easy for businesses to make internet banking payment.

Exempt safe, indexed ETFs from new rules

Published in Straits Times Forum, 26 January 2012 

NEW regulations require consumers to get appropriate investment advice before investing in financial products that carry higher risks, such as structured products and investment funds.

However, they have the unintended consequence of preventing the online purchase of certain indexed exchange traded funds (ETFs) that are suitable for long-term investment. It is ironic that investors are allowed to make online purchase of individual stocks but are disallowed from investing in ETFs that allow them to diversify their risk over a number of blue chip companies that comprise the stock market index.

I recognise that some ETFs are invested in financial derivatives or are leveraged and are not suitable for investors who are not aware or not properly advised about the risks. But these risks do not apply to non-leveraged ETFs invested directly in the component shares of the stock market index. A few ETFs quoted in the Singapore Exchange meet this criterion and are safer than investing in individual stocks.

I suggest that the Monetary Authority of Singapore exempt the non-leveraged, indexed ETFs from the need to receive appropriate advice.

Tan Kin Lian
President
Financial Services Consumer Association

Integration of immigrants

If France finds that they have too many immigrants and cannot integrate them, how about Singapore? We face a bigger challenge!

http://www.tremeritus.com/2012/05/05/sarkozy-says-france-has-too-many-immigrants-and-cant-integrate-them/

Can someone help me to find the proportion of immigrants in France and in Singapore?

Priorities @ Retirement - Photos

Early comers had a seat

Late comers had  to stand

About 100 people attended my talk on 5 May. There is not enough room, so many participants had to stand.

The next talk will be held today at 3 pm, Suntec City - SPH Life Matters.







I covered 3 topics
- invest retirement savings
- cope with rising cost of health care
- prepare to depart from this world

In the Q&A, the participants asked about investments, insurance and wills.

Taking a bus

I have to go to Suntec City to give a talk this afternoon. I decided not to drive there. I search the app "gothere.sg" and was surprised that there is a direct bus that takes 20 mins, excluding walking and waiting time, to my destination. This is more convenient that driving and finding a place to park the car. The app is available at Apple Store for only $0.99. If more people are able to find a convenient way to take a bus, this is possible the best form of transport - better than driving a car or taking the MRT.

How doctors die

Many people are worried about the high cost of health care, when they grow old. They hear stories about how expensive medical treatment can be.

This article explains how doctors approach this question. When they get very sick, they decide whether or not to go for treatment. If the chance of survival is small, they prefer not to be treated.

http://tankinlian.com/admin/file.aspx?id=639

If the elderly patient does not waste money on futile treatment, the expenses can be much lower.

SPH Life Matters 2012

I gave a talk entitled "Priorities @ Retirement" at the above exhibition held at Suntec City.
The room was packed. I am giving another talk on Sunday 6 May at 3 pm.

Here is the powerpoint used for the talk: http://tankinlian.com/admin/file.aspx?id=638

Healthcare and income inequality

Lucky Tan writes about Prof Tommy Koh's views:
http://singaporemind.blogspot.com/2012/05/tommy-koh-on-healthcare-and-income.html

Eldershield payouts inadequate

Straits Times has published my letter in the Online Forum
http://www.straitstimes.com/STForum/OnlineStory/STIStory_795371.html

Crying wolf over minimum wage policy

Employers are crying wolf over the minimum wage policy, making dire predictions of a disorderly labor market. http://www.todayonline.com/World/EDC120504-0000033/Warning-against-KLs-minimum-wage-policy

The evidence from many countries with minimum wage policy is that they will be observed and that the income gap will reduce. I expect that this will be the outcome in Malaysia as well. We have to study the outcome in Malaysia. If it is implemented successfully, there will be one less reason for Singapore to reject this policy.

Perpetual bonds

Read my views about perpetual bonds in www.fisca.sg.

Medishield and private Shield

A reader asked for my views. Her mother had hypertension and was rejected for insurance under Medishield. She asked if it she should apply for private Shield.

My reply

If she apply for private Shield, she is likely to be rejected anyway. 

Do not worry if your mother does not have Medishield. 

If she is sick, she can go to B2 or C ward and the bill will be quite affordable. 

You can read my articles here

http://tankinlian.com/Information.aspx?q=medishield 

My thoughts on Medishield

Over two million Singapoerans are covered under Medishield and similar policies, called private Shields, issued by the insurance companies. 

All the private Shields are required to reinsure the basic component of their coverage with Medishield under the "integrated Medishield:" arrangement. In essence, Medishield is almost a universal insurance scheme covering most Singaporeans.

Medisheld now has two restrictions, namely

a) It excludes pre-existing illness and congenital conditions at the time of coverage

b) It rejects applicants who are not in good health, e.g. suffering from chronic illness

It is appropriate for Medishield to be amended to cover congential conditions and people with pre-existing conditions, and adopt other risk management methods to handle the pre-existing conditions.

The other methods are:

a) require applicants with pre-existing conditions to pay a higher premium, also called a loading

b) exclude coverage of pre-existing conditions for a waiting period of one or two years, and provide full coverage thereafter

These other methods of risk management are appropriate for an insurance scheme that has standard coverage, such as Medishield, and also has a large base of people who are covered.

If Medishield provides this coverage, all the other private Shields will automatically provide the same coverage, due to the reinsurance arrangement under the "integrated scheme".

The purpose of insurance is to provide the benefit of risk pooling to large numbers of people in an economic way. This includes the need to insure people with congential conditions and pre-existing conditions. While the insurance scheme should be run on a viable basis, and appropriate risk management methods should be applied, the purpose should NOT be to maximise profits for the insurance company. It should have its social purpose of providing cover to those who need it at an economic cost.

We all now that as a person gets older, there will be some chronic illness that have to be managed and insured. This can represent a large part of the population. They should not be excluded by the restrictive underwriting standards.

I suggest that the Minister for Health seek the advice of suitable experienced people who do not have any conflict of interest, i.e. running an insurance company now, to provide advice to him on the insurance aspect of this review of Medishield. There are many retired insurance practitioners who are able to play this role.

Introduction: 

Tan Kin Lian was the former chief executive of NTUC Income. He is now the director of a consultancy and software development company called Tan Kin Lian & Associates Pte ltd. He is also the Founder and President of the Financial Services Consumer Association (FISCA), an organisation with the aim of educating consumers on financial planning, insurance and investments, and to promote the interest of consumers. (www.fisca.sg). He writes a blog atwww.tankinlian.blogspot.com

Insurance should cover everyone

I have given my views on Medishield and it is quoted in this article in Yahoo
http://sg.news.yahoo.com/insurance-should-cover-everyone--ambassador-tommy-koh.html

Cheating - using counterfeit chips

If a person uses counterfeit chips in a casino, the person is considered as cheating the casino and will be charged. 

http://www.todayonline.com/Singapore/Singaporeinbrief/EDC120503-0000066/Man-to-be-charged-for-using-counterfeit-casino-chips

We need to apply the same standard of diligence for other types of cheating - for example, when someone makes untrue statements and collects money from people from people who were misled by these statements.There are many victims who paid a lot of money to attend  forex training courses, or who buys land, wine or other products at inflated prices.

Good for expatriates

Singapore is the 4th most desirable place to work, according to this report. I observe that it is good for expatriates, but not so good for locals, based on the complaints about the cost of living and competition with foreigners.
http://www.todayonline.com/Singapore/EDC120503-0000049/Spore-4th-most-desirable-place-in-which-to-live,-work

Get updated information on a property

Before you buy, sell or rent a property, you should get the latest prices on the property. In this talk arranged by FISCA, a speaker from a prominent website will explain how to get the useful information that can help you to make a better decision. http://easyapps.sg/assn/Org/Event.aspx?id=5

Pay a fee for financial planning advice

29 April 2012

Editor, Forum Page

Straits Times

It is important for Singaporeans to follow a properly designed

financial plan to ensure that they have adequate savings for their

future needs.

This involves budgeting, putting aside part of the earnings

as savings for the future, investing the savings to get an 

adequate return that can more than cover inflation, and buying

the right type of insurance to cover the contingency of

premature death.

This financial plan involves more than just buying life insurance. 

In fact, the wrong type of life insurance policy can give a poor return 

that can make damage a person's financial security. 

Indeed, most life insurance policies require a fixed amount of 

regular savings, making them unsuitable in an environment of

rapid change and job uncertainty.

The financial adviser should focus on holistic financial planning 

and should recommend a financial plan that is adaptable and 

suit a person's circumstances. 

Consumers should approach a financial adviser that is 

not tied to selling any specific financial product. Consumers  

should be prepared to pay a fee for the advice, based on the time

spent by the adviser. 

Consumers should also invest the time and money to attend

educational talks on financial planning that are organized by 

consumer based organisations that do not have any ties with 

any financial institution. (www.fisca.sg)

Tan Kin Lian

President
Financial Services Consumer Association

Pro-active regulator

The UK regulator is taking pro-active action on behalf of investors to seek compensation for their losses due to mis-selling of financial products.
http://uk.finance.yahoo.com/news/1-uks-fsa-seeks-compensation-141809995.html

Fuel subsidy in Indonesia

The price of benzine (a low octane grade of petrol) was 4,500 rupiah a litre (about SGD $0.60). This is used by most vehicles, including non-luxury cars and motor cycles and is heavy subsidized by the government. The government wanted to raise the price to about $1 but could not push it through, due to large demonstrations.

The fuel were provided by Petromina and Shell. They received a subsidy from the government to sell the fuel at below the market price. There was also a need to prevent the subsidized fuel from being used for other purposes. For example, a consumer cannot buy the subsidized fuel in a can and has to be pumped into a vehicle - but there is really no way to stop the consumer from pumping the subsidized fuel out of the vehicle later.

Luxury cars in Indonesia have to pay a price of about $1.20 for a higher grade of petrol. This is still much cheaper than petrol in Singapore - which cost about $2.20, nearly double. Petrol is more expensive in Singapore due to tax (about $0.44 cents per litre).

May Day Demonstration in Jakarta

I was in Jakarta on 1 May. It was a working day. There were several big demonstrations in various parts of Jakarta which were well covered on television. The demonstrations were peaceful and orderly.

Unlike most countries, Indonesia does not declare 1 May to be a public holiday. I was told that they already have 20 public holidays in a year, as they recognise 1 or 2 public holidays for each religion and they recognize many religions.

Many workers turn out for the demonstrations because the law requires them to be paid by the employer even when they are out on demonstration. My Indonesian friend said that this is a "crazy" law. I said that after letting off steam, they can be more productive when they are back at work.

I had to attend a meeting in an office near Parliament House, where I large demonstration was being held. I had expected that there will be a bad traffic congestion. To my surprise, the roads were clear. Many cars avoided that area. The demonstration ended before my meeting, and before the cars came back. It was the first time that I experienced light traffic!

Here is a report from Channel News Asia
http://www.channelnewsasia.com/stories/afp_asiapacific/view/1198576/1/.html

Forced to work after age 70

This IS whast will happen when we are forced to work after age 70.

http://www.youtube.com/watch_popup?v=19THRdXxmaI

Midview City

A few owners of strata title units in Midview City have expressed unhappiness with the managing agent and wishes to get together to discuss possible actions. If you are an owner and wish to join this meeting, please send your particulars to kinlian@gmail.com with your name, telephone, email and unit number in Midview City.

No end in sight to global job crisis

The International Labor Organization has stated that there is still no solution to the Global Jobs Crisis. http://www.cnbc.com//id/47226507

I have held this view for a long time. I do not see how the world can create enough jobs, when those with jobs are working long hours and the available work has been reduced through mechanization and other labor saving devices.

The only solution is to reduce the number of hours of work, so that the available work can be distributed fairly among those who are willing and able to work. Some economists have suggested a 20 hour work week.

It is not possible a country to be competitive, if its people work shorter hours than workers in other countries. We need to have an international agreement to reduce the working hours, or to implement some form of protectionism of certain domestic jobs. There is no other solution.

Special lane for frequent flyers

I find airport security check to be a hassle. I hope that this new arrangement can be implemented soon in many airports around the world, including Singapore. http://www.cnbc.com//id/47089179

Protests in Bahrain

http://yawningbread.wordpress.com/2012/04/29/the-day-that-singaporeans-take-to-the-streets/

Licence to take deposits

In most countries, an operator who take deposits from the public and pays interest on the deposit is required to get a licence from the authority. In Singapore, this role is performed by banks and finance companies. It would be illegal for someone to take deposit without a licence.

There is a company that sells gold bars at 20% to 25% higher than the actual value of the gold bar and promises to pay 2% interest a month on the contract. I consider this arrangement to be a hidden form of deposit. If the actual value of the gold bar is $100,000 and the company sells it for $120,000, the company is actually taking in a deposit of $20,000 and paying interest on this deposit.

As the return is so attractive, the early investors are likely to be putting in more money and getting their friends to join the scheme. It is possible that the attractive return to the investors are being financed by the funds provided by the latter investors. In essence, this would be a ponzi scheme.

The law against deposit taking without a licence is to ensure that the the licensed companies have sufficient capital and assets to meet their obligations. They should not be allowed to collect tens or hundreds of millions of deposits and run away with the money.

Since the Monetary Authority of Singapore is responsible to issue licence for approved institutions to take deposits from the public, it should also be their responsibility to take legal action against operators who take deposits without a licence.

I consider the arrangement by the gold bar company to fall within the scope of responsibility of MAS and that MAS should investigate and, if appropriate, charge the operators for infringing the law.

The officials of MAS may not have the resources to carry out criminal investigations. But they can lodge a complaint with the Commercial Affairs Department, for the latter to make the investigation. MAS can also seek the legal advice of the  Attorney General's Office. It is important for the three agencies to work together to deal with this issue. So far, my impression is that  each party considers that they are not responsible for this matter.

I hope that early action can be taken, before this matter grows too big and the whole arrangement collapses like a house of cards, or rather, like a ponzi scheme.

Avoiding tax

Profitable companies should pay their share of tax and should not be allowed to avoid tax. To hold ethics and integrity, lawyers and accountants should not use their professional knowledge to help profitable companies to avoid tax, for the sake of earning large fees. This is immoral. Countries and states should not have laws that allow companies to avoid tax (and my statement applies to Singapore as well).
http://www.cnbc.com//id/47218258

Plight of 60 immoral men

We need to implement our laws in a fair and just manner. This statement applies to the prosecutor and our courts. We also need to compare our standards with the standards in other countries. Read this analysis by Lucky Tan.
http://singaporemind.blogspot.com/2012/04/plight-of-60-immoral-men-part-2.html

Bersih rally attracted 25,000 protesters

Main report
http://www.todayonline.com/World/EDC120428-0000089/Thousands-march-in-KL-in-election-protest

Police fire tear gas
http://www.todayonline.com/World/EDC120428-0000098/Tear-gas-fired-at-Bersih-rally

End in violence
http://www.todayonline.com/World/EDC120429-0000009/KL-protest-ends-in-violence

Unsafe driving habit of taxi driver

Dear Mr. Tan,


I was shocked to come across this post by a taxi driver on a taxi driver's forum. According to the taxi driver, he got into an early morning accident by hitting the back of a cement mixer at 4.50am on the PIE. From the pictures he posted, the cab was severely damaged. Yet according to his account, the taxi company did not question the nature of his accident or driving. According to him, they "immediately" proceeded to assign him a new cab.

There has been much debate online about which taxi company is lax in sorting out their reckless drivers and taking them off the road. I believe this incident serves as an indication of how lax or stringent some companies are. We should look into how to control and eliminate such driving and administrative practices, not let them continue. 

On another note, recently the LTA has decided to raise the maximum age of taxi drivers to 75. I believe this was "suggested" by one of Presidential contenders during the race last year.

From a concerned member of the public

High cost of car ownership

Owning a car can impoverish a Singaporean by millions of ringgit

by the time he retires.

http://thestar.com.my/news/story.asp?file=/2012/4/28/focus/11191642&sec=focus

 

Song from Malaysia - for the Bersih Rally

Hi Mr Tan,

Although this is from Malaysia, I thought you will find it interesting because your broad interest in politics and music.

I personally think that it is an incredible song with an incredible story. It is produced independently (meaning not linked to any political parties or the Bersih organization itself) by a lady from Johor. She was not able to make it to the Bersih rally last year because she has to take care of her paralyzed father, and to make up for it she produced this song with the help from many many volunteers. 

http://www.youtube.com/watch?v=kOmcoH5ksKY&feature=youtu.be&a

http://uppercaise.wordpress.com/2012/04/24/hoos-on-first-michelle-of-the-bersih-video/

Difficult to use DBS internet banking (IDEAL)

I find it so difficult to use DBS IDEAL system for internet banking payments that I will write cheques and drop them into the quick cheque deposit box (for payments to DBS payees). The IDEAL system is for business users and is extremely complicated and difficult to use. With so much trouble, it is likely to lead to costly mistakes, e.g. entering the wrong account code. I do not understand how DBS could design such a convoluted system. It is unimaginable. 

Similar types of cheating

According to this report , the Police are looking for a woman who was alleged to have cheated some people by soliciting money from them on the pretext that her husband had been hospitalized. Presumably, she was telling a lie. She collected sums varying form $50 to $450 from sympathizers. I do not know how much was involved, but it was probably less than $5,000 in total. I wonder why the Police would be so keen to take action on this case.

There is another person who has been advertising for many years that he is an expert in forex trading and is able to teach the trainees on the techniques of trading that are guaranteed to make profit.

These claims are not true, but there are enough trainees who believe the statements to fill up a class each month. Each trainee paid a few thousand dollars for three days of training. The total amount collected in training fees over the years must have amounted to several million dollars. Although several complaints were made to the Police, the activity of this trainer was not investigated.

It is clear to me that the untruths and misrepresentations told by the forex trainer were of the same kind as those told by the woman, and the amounts were several hundred times larger. When someone tells an untruth, and collect money from a person who was misled by the untruth, the perpetrator is "cheating" the victim. The same investigative action should be applied to both situations.

It would have been a simple matter for the Police to call the forex trainer and ask him to provide evidence to back up his advertising claims, and to show that he is not misleading or cheating the trainees. A simple interview would probably convince the forex trainer to stop or minimize the questionable activity. This would have saved the victims a lot of lost money not only in the training fees, but in actual losses on the forex transactions.

Tan Kin Lian

http://www.todayonline.com/Singapore/Singaporeinbrief/EDC120425-0000039/Police-looking-for-this-woman-to-assist-them-in-scam-investigation

FISCA Talk on Investments

This event will be held on Saturday. Register now. You can pay the fee on the spot. The next talk will be held a few months later. 

The best investments for consumers is to invest in ETF and REITS. This is explained in the FISCA talk on investments, scheduled for Saturday 2 t0 5 pm at Singapore Management University. This talk is free to FISCA members. The fee for non-members is $30. The public can join as FISCA members on the spot and pay $36 cash, and enjoy membership benefits for 1 year.

More details can be found here: http://www.easyapps.sg/assn/Org/file.aspx?id=195
Register here: http://easyapps.sg/assn/Org/EventRegForPublic.aspx?EvID=445&id=5

Eldershield - long term care insurance

Eldershield is a long term care insurance introduced by the Ministry of Health in Singapore and managed by private insurers. The benefits are indequate, as stated by Professor Phua Kai Hong. Here is a report http://www.todayonline.com/Singapore/EDC120426-0000068/ElderShield-under-fire

The journalist asked for my views about what can be done to promote Eldershield. Here is my full reply (of which only a small portion was mentioned in the article).

Statement by Tan Kin Lian

For long term care insurance to work, it is important for the Government to take the lead and also to set the framework to ensure that the consumers are treated fairly.

In the case of life insurance, it is easy to determine the eligibility for a claim, based on the certificate of death. The eligibility for a long term care claim can be subject to dispute between the claimant or his family and the insurance company. The definition of eligibility for a long term care payment depends on the inability to perform at least 3 out of the specified 6 activities of daily living - washing, dressing, feeding, toileting, mobility and transferring. As you can see from the definition, each of these disability may be difficult to define.

If there is no Government involvement to set the framework to determine the eligibility for a claim, the insurance company can be quite strict in interpreting the eligibility to the detriment of the consumer, and the consumer will usually not have the financial means to challenge the decision of the insurance company. Due to lack of clarity and transparency, it is likely that consumers will not trust the insurance company or the long term care insurance product.

The involvement of the Government goes beyond the framework for approval of the claims. The Government should also carry out audits to ensure that the insurance companies are pricing the insurance product fairly and are not making excessive profits by over-charging the consumers, or are reckless in under-pricing their product and hence face the prospect of insolvency.

The Government should also consider giving some tax or fiscal incentives to encourage consumers to buy the long term care insurance. At present, the Government allows the Medisave savings to be used to buy the insurance product. This is helpful but is not sufficient. 

It will be more useful if the Government decides to bear 30% (say) of the cost of the long term care insurance, so that consumers need only to pay 70% of the actual cost. This will encourage consumers to buy the long term care product and make it attractive for insurance companies to compete for this attractive market. 

In many countries, the Government has found that some form of tax or fiscal incentives is helpful to develop the insurance market and to overcome the resistance of consumers to set aside money for their future needs. Singapore should follow the experience of these countries, in order to get our citizens to plan for their future needs.

Background: 
Tan Kin Lian was the former chief executive of NTUC Income. He is now the director of a consultancy and software development company called Tan Kin Lian & Associates Pte ltd. He is also the Founder and President of the Financial Services Consumer Association (FISCA), an organisation with the aim of educating consumers on financial planning, insurance and investments, and to promote the interest of consumers. (www.fisca.sg).

Ponzi scheme in the making

I have posted this article about a possible ponzi scheme that may blow up in the near future: http://tankinlian.com/admin/file.aspx?id=637

One reader, who has made large investment in the gold bar scheme, told me that the chance of loss is small, as the investor has a certificate that can be used to withdraw the physical gold that has been deposited with a reputable depository bank. If the gold price keeps its value, the investor will not lose out, even if the promoter does not honor the buy back guarantee.

This is likely to be a fallacy. It is possible for the promoter to be issuing duplicate certificates for the same physical gold. If the promoter collapses, many people may be holding the certificates to the same bar of physical gold. I do not know if the certificate is issued by the depository bank and if there is any chance of duplicates being made. The investor should check this possibility.

A ponzi scheme can continue as long as it keeps growing. This is likely to be the case, as the investor loves the 2% interest per month and will keep their investment to earn this high rate of interest. They are likely to put in more money and to encourage their friends to join this attractive scheme. The growth of a ponzi scheme is exponential. This is the behavior of most ponzi schemes in the past. It will not be different this time.

The investor also asked - if this is really a ponzi scheme, why is the Monetary Authority of Singapore or the Commercial Affairs Department not taking any action to stop it?

Do not be lulled by the lack of action by our authority. The MAS has already put an alert on their website and asked the public to lodge a complaint with CAD, if they suspect any fraud. I do not know why MAS expects the public to do the investigation. It is quite easy for MAS to engage an investigator, at the cost of the Government, to see if there is any risk of a fraud, rather than wait for it to happen.

My remark also applies to the Commercial Affairs Department. They have the power, authority and the resources to carry out an investigation. They only need to have reasonable grounds to make an investigation into a potential ponzi scheme. I do not know why they hold the view that there is inadequate evidence to start an investigation. If they do not think that an investigation is warranted, why not just make an enquiry?

My remark is also directed at our Government Ministers who might have some of their underlings to monitor my blog. Do not sit idly and wait for the potential ponzi scheme to grow bigger and cause more people to lose their hard earned savings. Just make an enquiry now with the promoter and make sure that they have sufficient gold bar and money to back all the deposits that they have collected from the public. And when they are talking to the promoter, do find out how much money has been invested by the people of Singapore in this attractive investment scheme that pays 2% interest a month.

My request is specially directed to our Deputy Prime Minister and Minister for Home Affairs, who should in charge of the Commercial Affairs Department.

Tan Kin Lian

PS: If the authority does make an enquiry and find that my suspicious are groundless, do tell me about it, so that I will stop "crying wolf".

Decision makers should take public transport

This writer requests that decision makers should take public transport and understand the problem on the ground. I agree.

http://www.todayonline.com/Voices/EDC120425-0000181/Have-express-buses-from-Yishun-to-Bishan-to-ease-the-MRT-bottleneck

A ponzi scheme in gold bars

Read this article about what may happen one day, that will cause tens or hundreds of millions of losses to unwary and gullible investors in Singapore.
http://tankinlian.com/admin/file.aspx?id=637

Great careers for older workers

Hi Tan,

I recently discovered your blog, and I have become a frequent reader. We recently published an article “8 Great Careers for Older Workers” that dovetails well with your audience, Perhaps you would be interested in sharing with them.

Here's the link to the article if you would like to take a quick look for yourself: (http://www.businessinsurance.org/8-great-careers-for-older-workers/).

Roxanne McAnn

Contact Singapore Management University

I searched for the contact information of Singapore Management University. I could find the "Contact Us" button at their home page. Although small, it was not difficult to find. That button brought me to a webpage that the following information. I was delighted that they provide an email address and a telephone number!


I wish to encourage all corporations (business and government) to provide this type of useful information for the public to contact them. I encourage them to use the services provided by this Corporate Portal,
http://www.easyapps.sg/corporateportal

"Bersih" rally in Kuala Lumpur

It is interesting to watch the forthcoming happening of the Bersih rally in Kuala Lumpur. A similar rally last year was tightly controlled by the Police. This year's rally will happen in a more relaxed atmosphere. It reflects the confidence of Prime Minister Najib in opening up the political environment in Malaysia. I hope that the rally, which called for "free and fair elections", goes on peacefully and well.
http://www.channelnewsasia.com/stories/southeastasia/view/1197192/1/.html

If so, this could lead to similar developments in Singapore. We can also learn from Malaysia.

Complicated arrangement between LTA and SMRT

According to this news report, the SMRT will be spending $900 million for the maintenance and repair of the MRT system. Part of the cost will be borne by the Government, through the Land Transport Authority (LTA).

http://www.channelnewsasia.com/stories/singaporelocalnews/view/1197159/1/.html

This seemed to be a complicated arrangement and has ethical issues. SMRT is a listed company owned by shareholders and has the aim to maximise its profits, subject to service standards stipulated by the LTA and fare oversight by the Public Transport Council. The LTA is an agency funded by the Government and eventually the taxpayers.

The taxpayers are not told how the complicated financial arrangement is being decided. In my view, the considerations for the cost sharing, should be publicized for public scrutiny.

It is better to remove all these complicated arrangements and adopt a new model, i.e. let the train service be operated by a public corporation, i.e. one that is owned 100% by the state. The public corporation should decide on the fares, capacity, routes and schedules. The operations can be contracted out to a contractor like the SMRT.

I read that this was the model used by London Transport for the buses. I am not sure how their Underground system, similar to our MRT, is being managed.

It is likely that the London model will not be considered in Singapore, as our ministers and top civil servants are quite comfortable in the Singapore model of "no responsibility". They prefer to outsource all the problems entirely to the "market", so they do not have to decide on fares and operational issues.

As they have now learnt to their embarrassment, the problems do not go away. They come back to hit them in a bigger way. With so many train breakdowns and other operational and financial issues, perhaps our ministers will now re-think the London model?

Tan Kin Lian

Social model is the solution, not the problem

I agree with the views expressed by this writer
http://www.todayonline.com/Commentary/EDC120424-0000011/Social-model-is-Europes-solution,-not-its-problem

I will give my reasons separately.

Avoid Land Banking

Dear Mr. Tan 
Do you have any information about A2A land banking in Canada.

Reply
I do not have any information about this product. I advise consumers to avoid all types of land banking products. You can attend my talk on Financial Planning organised by FISCA.
See http://easyapps.sg/assn/Org/Event.aspx?id=5
Tan Kin Lian

Statement from one of the accused in the sex scandal

Dear Sir


I would like to add that I hope that you can help disseminate the following legal points of course with appropriate verification as some recent commentary on your blog posting have not fully grasped the law and the extent to which its drafting defers from that of the United Kingdom and its equivalent the Sexual Offences Act 2003.

Many commentators have noted the fact that the "onus" is on the man to check, Many do not know or fail to mention , that even after making all reasonable efforts to "check', the law in this case has a conclusive presumption WHICH does not allow for any defense except only in mitigation.  If it is as true more senior lawyers emerge who should and would know the law better, the difficulty it places on men and not allowing them any defense is all the more apparent.

a. For many who will be convicted the clincher will be the very issue of not being able to offer a defense that we did not or could not have reasonably, rationally, on the predominance of evidence known that she was under 18. The only defense left thus is that we did not do it, or we paid for her company and not sex. No intent or means has to be proven just the act and no defense can be offered.


b. That presumption applies in the UK, but it kicks in at a fairer age and for a more serious offense, i.e sex with a minor and at 13

c. As far as I can remember within the Singapore Penal Code. There are two sorts of presumption. A presumption which shift the burden of proof, but it means that you can offer a defense i.e in Drug Trafficking. and a presumption which does not allow a defense. which as far as I know exists only within the " Fire Arms Act" for unlawful discharge of a firearm, commercial sex with a minor defined at 18 and sex with a minor under 16 which would be statutory rape.   Is the offense that serious as to merit a removal of due process and equal treatment under the law and a right to a fair trial ?

d. Please note that sex with a minor is treated more seriously under a count of statutory rape with sentences including caning as an example. If any of us had deliberately had sex with an under 16 we would be facing an infinitely more serious charge and more serious consequences, something which none of the 48 would have wanted.

e. So thus comes the logical illogic, If a 17 year old can legally have sex, but she cannot legally sell herself for sex and if she is caught selling sex its her customers who face the music. Yet the customers are limited in their defense even if they can proof she lied to them, showed them a fake ID, showed the pimp a fake ID, none of it legally at the end of the day matters because the very act is sufficient for conviction]

f. I would like to add finally that prostitution crudely put on a retail level has many aspects.   The mass market , street level prostitution encompasses a large degree of human trafficking, human slavery of the worst kind.   As many have grasped a social escort which offers "luxury" pricing and with a database of alleged well of individuals cannot by any stretch of logic encompass the worst and most inhumane aspects of prostitution and human trafficking.

Sincerely Yours
1/48

Bad sales practice of bank

A consumer showed me a complicated product. It involved placing a fixed deposit of $30,000 with a bank to earn a special promotion interest rate. To qualify for this promotion, the consumer had to place some money in a 15 year product, with the promise that it carried no investment risk.

This 15 year product turned out to be a life insurance policy with an annual premium of $10,000. This is shocking. The wealth manager of the bank, that promoted the product, did not give the consumer any benefit illustration for the life insurance policy and did not tell the consumer, who is an elderly housewife, that the life insurance policy required an annual premium to be paid for 15 years. How is the housewife going to afford paying this annual premium?
\
The wealth manager did not tell the consumer that if she could not pay the annual premium, the life insurance policy could lapse and she would lose all of her savings during the first two years. If she lapse the policy after two years, the cash value could be much less than the premiums paid. She also did not tell the consumer that the life insurance policy could take away more than one year of savings as distribution cost.

I find it a deplorable practice for a reputable bank to be pushing a life insurance product under misleading circumstances. There is a wide scope for such misleading sales practices in this manner, especially when it is packaged with a bank product.

I will be asking the Financial Advisory Industry Review (FAIR) panel to consider banning  banks from packaging life insurance products with the traditional bank products, to prevent this type of rampant mis-selling.

Lasting power of attorney

This is an interesting new service, which is useful for consumers.
http://www.publicguardian.gov.sg/PrePlan/HowCanIMakeaLastingPowerofAttorney.aspx

My friend told me that there are practical problems in finding a certificate issuer, but I think that this problem can be overcomed.