Surrender a Living policy

I have decided to surrender my Living policy which was taken 17 years ago.  I paid an annual premium of $2,102. The cash value after 17 years is $44,893 giving a yield of about 2.5%.

If I keep the policy for another five years, the estimated cash value increases to $62,417, giving a yield of 3.9% for the next 5 years, based on the projected bonus for the next 5 years.  I have decided not to take the risk of a further reduction in bonus, which will reduce the yield below 3.9%. 

By surrendering the policy, I can invest the money in other investments. As the share prices are quite low, there is a good chance of earning a better high rate of return from other investments.

The calculation is based on this FAQ.

Pinnacle Action Group: Class Action in U.S. Courts being considered

Dear all

A top US law firm is interested to actively pursue on behalf of all Pinnacle investors a class action in US courts. It will be on a contingency fee basis - "no win, no pay" and all investors will be automatically included, unless they opt-out, after the class action is filed with US Courts. It will be an action similar to the one being done for Hong Kong Minibonds investors.

However, under US law such a class-action can only be initiated if there are at least one or more lead plaintiffs who fit the following criteria:
(a) US citizens who bought one or more of series of the Pinnacle Notes;
(b) Spore citizens with bank accounts kept in a US Bank who bought one or more series of the Pinnacle Notes;
(c) Spore citizens who own homes in the US who bought one or more of the Notes.

If you fit into any of the 3 criteria mentioned in the above paragraph, please contact us with your name; tel. no.; email and other details such as Pinnacle series no . that you bought, etc. We will forward the information to the US law firm, which for confidentiality reasons cannot be revealed at this early stage. When the US law firm in turn contacts you in the matter of the proposed class action to be pursued in US courts, you will know who they are.

This 'US style' class action, by the way, is separate from the proposed class action we are planning for all Pinnacle investors under Spore law and pursued in Spore courts. In the Spore case, we will be making an official announcement when we have finalized the details. It could take another 2-3 months more to do that since there are many details to iron out. But don't be discouraged, we are not going to allow this matter to simply evaporate and will work vigorously to pursue justice and compensation.

Best regards
Pinnacle Action Group

Email:- pinnacle.action.group@gmail.com 

Meet the man whose big idea felled Wall Street

Read this article.

Motor insurance premiums

Many motorists will have to pay higher insurance premiums this year. What can be done about it?

Read my articles:
Puncturing motor insurance claims.
New Motor Insurance measures - will it work?

If you are not happy with the increase in premiums, you should lodge a protest with your member of parliament or with the consumer association of Singapore.

The best places to be laid off

Read this article about countries with generous unemployment benefits and its impact (if any) on the work ethic.

Buddhist monks say Twitter can lead to happiness

Read this article.

Creating service jobs in Singapore

Global demand has dropped significantly. Singapore will have to suffer a drop in production and  exports for many months while global demand remains weak. Many more jobs will be lost. The Government's strategy of helping businesses to reduce cost may not help to save jobs in this environment.

I hope that the Government will look into other ways to create jobs and keep people occupied at a modest wage level. They only need to keep people usefully engaged until the recovery of the global economy. 

In France, the Government pays a large part of the cost of nannies to look after babies. The parent pays only a small portion. The nannies will look after the babies in the nannies' homes. The parents can afford to send the baby to the nanny, as their share of the cost is low. This helps to keep many nannies to be usefully employed.

I suggest the following ways to create temporary jobs in Singapore:

1)  The Government can pay a large part of the cost of engaging nannies to look after babies. The parents can pay only a small part (say 20%) of the cost. The nannies can be asked to meet certain standards of care.

2)  There is a need for tuition to help the students from poor families. The tuitors can be trained quickly to meet the educational standards.  A large part of the cost of these tutors can be paid by the Government, so that the cost to the students is kept low.

These two ideas can keep many people to be usefully employed until the recovery of the global economy. The wages can be kept low. When the economy recovers, they can find higher paying jobs in the private sector.

Tan Kin Lian

Business Week: Innovation - Singapore is No. 1, well ahead of USA

Read this article.

Thought for the day: challenge and controversy

"The ultimate measure of a man is not where he stands in moments of comfort, but where he stands at times of challenge and controversy.":

 

Rev. Dr. Martin Luther King, Jr. (1929-1968), US civil rights leader

Shin Min Interview - General Election

Here are my replies in an interview with Jo Sum of Shin Min News.

 

Survey: Rating of Government ministries (Singapore)

How do you rate the work of the various ministries in Singapore? 

Survey.

Here are the survey results.

Motor insurance - regulator can play a part

14 March 2009

Editor
Forum Page
Straits Times

I refer to the letters by Raganathan Vivek “Why should we pay for insurer’s laxity” and Sia Chong Yew “It’s high time motor insurers put their house in order”.

I agree with the views of these writers. Motor insurers should be more active in combating inflated claims instead of passing the higher cost to consumers through premium increases.

During the 30 years that I headed NTUC Income, my colleagues paid special attention to deal with the inflated claims. We were able to keep the premiums at a more affordable level. We considered it to be our duty to the consumers and be profitable at the same time.

I wish to point out that, apart from the motor insurers, the regulatory authority can play a part as well. Most inflated claims are made by third parties claiming for the repair cost, injury and medical expenses. These claims are lodged with the insurance company a long time after the accident, making it difficult for the claim adjustor to assess the actual and fair amounts of compensation.

To make matters worse, the claims are lodged through lawyers, which increased the total claim payments by an estimated 30%.

This matter can be resolved by a simpler regulatory change. Make it compulsory for a third party to lodge the third party claim with the insurance company within 24 hours of the accident. The insurance company should be given the opportunity to inspect the vehicle and settle the claim directly and promptly. The third party should engage a lawyer only in the event of a dispute on liability.

This practice is adopted in many countries, either as a regulator requirement or as a market practice. It is surprising that Singapore continues to have many third party claims settled in an inefficient and expensive manner through the legal system.

I hope that the relevant authority, i.e. the Monetary Authority of Singapore or the Land Transport Authority, will make the necessary change to the regulation to address this problem. This will reduce the inflated claims by several hundred millions of dollars and lower the cost of motor insurance to consumers.

Tan Kin Lian

Motor Insurance premiums set to rise

Last week, it was reported that the motor insurers lost more than $200 million in 2008 and that the insurance premiums are set to rise significantly in 2009.

Last May, the General Insurance Association of Singapore announced bold measures to tackle this matter. They involved measures that could cause much inconvenience to motorists, but the Association promised that these measures would arrest the problem. 

Today Paper asked me to write an article on this matter last May. It is published in the paper. I was sceptical about the masures. Perhaps, someone can asked the Assocation to comment on the failure of their measures?

Tan Kin Lian

Bird Nest Stadium in Beijing

The Beijing National Stadium, more commonly described as the Bird Nest, cost USD 423 million to build.

Someone commented that the stadium was not used after the Beijing Olympics. Is this wasteful?

What could China do with the same money?
1. Invest in US Treasuries to earn interest at 4%?
2. Build houses for the people in China to live in?
3. Give the money to third world countries as aid?

I believe that the money is well spent, as it builds the infrastructure that can be used for the next 30 years. It also gave jobs for the workers who are involved in the construction. If not, these workers might be idle.

Of course, the workers can be used to build houses for the people to live in, but this is already catered by the private sector. I believe that it is the duty of the Government to build the long term infrastructure of the country.

Life insurance quotation gives misleading information

A policyholder bought a 21 year anticipated endowment policy with an annual payment of $14,500. The quotation clearly stated that a sumof $20,000 is paid every 3 years and the payment on maturity is $80,000 plus RB/SB of $264,800 giving a total payout of $344,800.  There was no explanation about the RB/SB and that it is not guaranteed. The policyholder was misled by the agent into believing that the payment is guaranteed.

The policy is now approaching the maturity date. The policyholder is now told that the actual maturity payout is only $232,400, comprising of $80,000 plus RB/SB of 152,400 (i.e. decrease of $102,400) from the quotation. The policyholder was shocked to see this amount of reduction.

I advised the policyholder to file a complaint to FIDREC and, if not resolved, to take a legal case.

MY VIEW: 

Now I know why this insurance company was so successful in its sales over the past years. The agents were able to sell large policies by providing misleading quotations to the customers. Most of these customers are not well educated and trusted the verbal explanation of the agents. When they learned the truth years later, it was too late. 

The root cause of this problem is the excessive commission paid to the agent and the poor supervision of the insurance company on the conduct of their agents. I hope that this unhealthy practice is properly addressed.

Low cash value on termination

Dear Sir,
I have a PRUCASH policy that started in 2002. The annual premium is $3934. The coverage is very low at $50,000 because it is meant to be an endowment plan. The annual cashback is $2500.

I've only recently educated myself through your website and other sources on how insurance and savings should really work and realised how big a mistake I made when I bought that policy.
The cash value now is about $16000, whereas my premiums paid to date is about $27000.
If I surrender my policy now, I'll "lose" around $9000.

What is my best course of action?Should I continue with the policy and take out the cashback yearly to invest in a low-cost ETF? Or should I terminate the policy and invest in an ETF with the entire sum? The difference in yields required for me to make up that $9000 loss seems to be quite huge.

REPLY
You should ask the insurance company to explain why you had to lose so much money, if you terminate it now. They owe an explanation to you.

To make a decision on whether to continue or terminate the policy, you should ask for additional information. Please read the relevant document in my website, www.tankinlian.com/faq

Interested in Part Time Work

Dear Sir/Madam:
I’m X, a permanent resident, looking for any part time job (clinic asst, office attendant, call center, packer). A copy of my resume is enclosed for your references. My email address is Y or mobile number Z.

REPLY
Please register in the portal, www.easyapps.sg/ptw

A prospective employer will contact you. As this is just set up, it may take some time before you get a response. Wish you all the best.

To register
Click on Worker Tab, select the postal sector and type of work, click on View (to see other candidates) and then Register.

Flaw in MAS Fast Track Process

Dear Mr. Tan,

I came across this paragraph in the Q&A issued by MAS regarding the Fast-Track process:

"Under the fast tract process, the FI is required to help me prepare a written statement, taking guidance from a checklist of questions (which incorporates inputs from FIDReC. Similarly, the representative/RM who sold me the product is also required to give a written statement, again taking guidance from a checklist (incorporating inputs provided to FIDReC).

To me, this fast tract process seems rather odd and does not make much sense. Here is a situation where I am complaining against the FI, and under this fast tract process, the FI is required to help me prepare a written statement .........

Why should the FI in this instance help me. I would have thought that the FI would try make my statement as weak as possible and at the same time make use of my statement to defend their position against my complaint.

JL

REPLY
I agree with your view. I suggest that you bring this point up with MAS.

Financial Times: Singapore acts on bank secrecy laws

Singapore promised on Friday to relax its strict bank secrecy laws in a sign of the escalating international pressure on tax evasion.

Hong Kong decided to bring its tax transparency up to international standards, and both moves advance the campaign against tax havens.

John Withers, deputy chairman of Step Worldwide, a professional body for wealth advisers, said: “If Singapore is moving in that direction it narrows down the places to which undisclosed money can easily be banked and it puts pressure on Switzerland to follow suit. It is the beginning of the end of bank secrecy.”

The moves came as the US administration endorsed a bill targeting tax havens. Tim Geithner, US Treasury secretary, promised a “much more ambitious effort to deal with offshore tax havens”.

Singapore’s concession is a big shift for a city-state accused of marketing itself as the “ultimate secrecy jurisdiction” by the Organisation for Economic Co-operation and Development at a US Senate hearing in 2007.

Singapore’s finance ministry said it would amend its bank secrecy laws in mid-2009 to take account of the OECD’s standards on exchange of information. “Once the legislative amendments are passed in parliament, Singapore is prepared to negotiate and conclude double taxation agreements that will enable us to provide further assistance for exchange of information.”

It said: “The decision . . . is in keeping with Singapore’s role as a trusted centre for finance and a responsible jurisdiction, with strong and consistent regulatory policies and a firm commitment to the rule of law.”

The promised changes will allow foreign tax authorities to request information about suspected tax evaders, although Singapore said “information fishing” would not be allowed and there would be confidentiality and privacy safeguards, as allowed under OECD rules.

Even so, its announcement will be applauded by other offshore centres that have lost business to Singapore.

Lee Kuan Yew, modern Singapore’s founding father, told bankers the city-state could not escape the pressure being applied to Switzerland. “We must move with the flow,” he said.

Last week, John Tsang, Hong Kong’s financial secretary, announced plans to legislate by mid-year to bring its tax information exchange provisions to international standards. “I believe that the business and professional community generally agrees that Hong Kong should align its arrangements for the exchange of tax information with international standards so that we can enter into such agreements with more economies.”

Singapore and Hong Kong are among 34 secrecy jurisdictions listed in the anti-tax haven bills introduced in the US Congress this week.

Management fee for REIT

Dear Mr. Tan,
I am a unit holder of Frasers Commercial Trust. Currently the pricing of the unit to pay for the management fee is based on average daily market price.The daily market price could be 15% of the net asset value of the unit when market for REIT is very low, and the number of units issued to pay for the management fee per year could be more than 6% of total number of unit, this will cause the dilution of the unit.

I suggest that the trust deed be amended. The pricing could be based on the net asset value of the unit instead of average market price when computing the number of units to be issued for Management Fee.

Mr Tan, I hope you can help us to bring this issue to the relevant authority.

HG