Hi Mr. Tan,
I have been a loyal policyholder of NTUC for many years. I am really disappointed with the bonus cut, affecting several of my policies, including the policies taken for my children. I am considering to cancel all of these policies and to invest in unit trusts. Do you advice this move?
REPLY
Do not cancel your existing policies, as you will suffer a financial loss. You can lodge a strong protest against the bonus cut to the board of directors and to the MAS. It is a serious breach of contract.
When you bought these policies, you were given a scale of bonuses to expect in the future. NTUC Income does not have the moral right to change this structure, in an arbitrary manner. You can bring up this matter with MAS as they have to safeguard the "reasonable expectation" of the participating policyholders.
In the future, you should avoid saving in life insurance policies, including policies with bonuses and investment linked policies. After deducting the agent's commission and marketing expenses, they give poor value to the policyholder. The modest yield is now being reduced further through the manipulation of the bonuses.
You should also tell your friends to avoid buying saving-type life insurance policies with high upfront charge, sold by insurance agents.
Buy low cost Term or accident insurance to provide the protection for your family. Read this FAQ:
http://www.tankinlian.com/faq/savings.html
Wednesday, April 30, 2008
Pay of leaders
A few days ago, someone passed this question to me, “Do You think our leaders' performance commensurate with their pay?”
It is my policy to avoid commenting on any specific person’s performance and pay, even if this person reports directly to me.
I wish to share my personal views on how corporate and government leaders around the world are rewarded.
The prevailing thinking is that corporate leaders should be rewarded based on the shareholder value that they have created. This approach appears to be wonderful in theory. But it has great difficulty in practice.
The current method of measuring shareholder value based on the share price is flawed. The share price can fluctuate wildly based on many factors that are not related to performance of the corporate leaders.
Corporate leaders like this method because they can get fat bonuses in good years, and are not required to pay back these bonuses during the bad years.
It has contributed to big moral risks. Some corporate leaders manipulate the accounts to show big profits in the early years. Remember Enron and Worldcom? Some others take big risks to boost short term profits. Remember subprime mortgages, hedge funds and special investment vehicles?
These corporate leaders earn unimaginable amounts during the good years. When their companies have to write off billions of dollars of shareholder money in the subsequent years, these leaders depart with golden parachutes.
How should government leaders be paid?
It is important that the rewards should attract the right type of people to take the risk and nature of political life.
Monetary reward is an important factor. But it should not be the sole or dominant factor. A passion for this type of work and life is equally important.
We should attract leaders who have the passion to help improve the living standards of the ordinary people. These leaders are willing to put their interest of the public above their personal interest and give up the bigger rewards of corporate life.
They need to receive an adequate remuneration, so that they do not need to supplement their incomes through corrupt means. A remuneration of 10 to 20 of the average earnings of the population, accompanied by a good pension, should be adequate to give a comfortable life. But it will not put them anywhere near the earnings of top corporate leaders and professionals.
I believe that there are many capable people who are willing to come forward for the satisfaction of serving the people and an adequate remuneration. This will be the best type of people to be in government.
If a country cannot find this type of people, then there must be something seriously wrong with the values of that country!
It is my policy to avoid commenting on any specific person’s performance and pay, even if this person reports directly to me.
I wish to share my personal views on how corporate and government leaders around the world are rewarded.
The prevailing thinking is that corporate leaders should be rewarded based on the shareholder value that they have created. This approach appears to be wonderful in theory. But it has great difficulty in practice.
The current method of measuring shareholder value based on the share price is flawed. The share price can fluctuate wildly based on many factors that are not related to performance of the corporate leaders.
Corporate leaders like this method because they can get fat bonuses in good years, and are not required to pay back these bonuses during the bad years.
It has contributed to big moral risks. Some corporate leaders manipulate the accounts to show big profits in the early years. Remember Enron and Worldcom? Some others take big risks to boost short term profits. Remember subprime mortgages, hedge funds and special investment vehicles?
These corporate leaders earn unimaginable amounts during the good years. When their companies have to write off billions of dollars of shareholder money in the subsequent years, these leaders depart with golden parachutes.
How should government leaders be paid?
It is important that the rewards should attract the right type of people to take the risk and nature of political life.
Monetary reward is an important factor. But it should not be the sole or dominant factor. A passion for this type of work and life is equally important.
We should attract leaders who have the passion to help improve the living standards of the ordinary people. These leaders are willing to put their interest of the public above their personal interest and give up the bigger rewards of corporate life.
They need to receive an adequate remuneration, so that they do not need to supplement their incomes through corrupt means. A remuneration of 10 to 20 of the average earnings of the population, accompanied by a good pension, should be adequate to give a comfortable life. But it will not put them anywhere near the earnings of top corporate leaders and professionals.
I believe that there are many capable people who are willing to come forward for the satisfaction of serving the people and an adequate remuneration. This will be the best type of people to be in government.
If a country cannot find this type of people, then there must be something seriously wrong with the values of that country!
Street maps and better signages
I parked my car at Suntec City to attend a dinner. I had to walk to Millenia Walk to collect a bag. I had some difficulty in finding the way to my destination. Someone approached me on the street and asked for directions to the National Library. He was also lost. I was not able to help.
In many cities, there are street maps displayed at prominent places to help visitors to find the way to prominent landmarks. This is sadly lacking in Singapore. Signages in Singapore are also poor.
I hope that some responsible agency can take the initiative to provide street maps and improve the signages to help people to move around more easily.
In many cities, there are street maps displayed at prominent places to help visitors to find the way to prominent landmarks. This is sadly lacking in Singapore. Signages in Singapore are also poor.
I hope that some responsible agency can take the initiative to provide street maps and improve the signages to help people to move around more easily.
Management direction has changed
Dear Mr. Tan,
Thanks for giving me a job when I am in need while you're still our CEO at NTUC INCOME.
I have decided to leave INCOME as the direction of the management changed.
The commercial mindset INCOME adopted is no doubt one of the good options but it will be likely at the expense of the policyholders as the cost of operation increased (renovation, staff salary adjustment and advertisement).
I really admired the days when INCOME was steered by your leadership. This is also one of the reasons that motivated me to join NTUC INCOME during your era. Your management has definitely secured a job for the staff under your care and benefited the policyholders at large as they enjoy good bonus from year to year from the policies.
Mr. Tan you're always a model for me to learn and I am looking forward to your return to this industry to benefit us.
Thanks for giving me a job when I am in need while you're still our CEO at NTUC INCOME.
I have decided to leave INCOME as the direction of the management changed.
The commercial mindset INCOME adopted is no doubt one of the good options but it will be likely at the expense of the policyholders as the cost of operation increased (renovation, staff salary adjustment and advertisement).
I really admired the days when INCOME was steered by your leadership. This is also one of the reasons that motivated me to join NTUC INCOME during your era. Your management has definitely secured a job for the staff under your care and benefited the policyholders at large as they enjoy good bonus from year to year from the policies.
Mr. Tan you're always a model for me to learn and I am looking forward to your return to this industry to benefit us.
How to invest in low cost investment funds
Hi Mr. Tan,
I read your article about not to invest in structured deposit. How do I go about getting the ideal plan ID7 or ETF as recommended by you? How much do invest and for about how long? Thank you.
REPLY
You can ask the business center of NTUC Income, if they can sell the ID7 plan to you. You can buy the ETF through a stockbroker.
You can invest any amount, subject to a minimum of 1,000 shares in the case of ETF. You can invest as long as you wish. Usually, you will get a better return when you invest for the long term, i.e. for 10 year, 20 years or longer.
Read this FAQ:
http://www.tankinlian.com/faq/savings.html
I read your article about not to invest in structured deposit. How do I go about getting the ideal plan ID7 or ETF as recommended by you? How much do invest and for about how long? Thank you.
REPLY
You can ask the business center of NTUC Income, if they can sell the ID7 plan to you. You can buy the ETF through a stockbroker.
You can invest any amount, subject to a minimum of 1,000 shares in the case of ETF. You can invest as long as you wish. Usually, you will get a better return when you invest for the long term, i.e. for 10 year, 20 years or longer.
Read this FAQ:
http://www.tankinlian.com/faq/savings.html
Terminate an existing life insurance policy
Hi Mr. Tan,
I have purchased an Umbrella Policy from NTUC since 1990. The cash value as of end Mar '08 is $X. I am thinking to terminate this policy and to invest the money instead. Do you think I should do this? Thanks a lot for taking time to help!
REPLY
It depends on the following:
a) do you still need the life insurance cover?
b) do you need the cash now, to spend on your daily expenses?
c) do you wish to reinvest it to earn a higher return?
Read this FAQ:
http://www.tankinlian.com/faq/existinglife.html
I hope that it gives useful informatin for you to make a decision.
I have purchased an Umbrella Policy from NTUC since 1990. The cash value as of end Mar '08 is $X. I am thinking to terminate this policy and to invest the money instead. Do you think I should do this? Thanks a lot for taking time to help!
REPLY
It depends on the following:
a) do you still need the life insurance cover?
b) do you need the cash now, to spend on your daily expenses?
c) do you wish to reinvest it to earn a higher return?
Read this FAQ:
http://www.tankinlian.com/faq/existinglife.html
I hope that it gives useful informatin for you to make a decision.
Difficult to assess the risk
Mr. Tan,
I would like to seek your opinion on the MQ yield 2.08% product, as advertised in Strait Times . Do you think this is safe ?
As you know, the interest rates for FD is so low. I am thinking of treating this as a FD for 2 years. Coupon 2.08% annually, payable every 6 months.
This is a capital guaranteed. Provided Macqueries Bank does not go burst. This seem unlikely to happen. Can you please highlight other possible risks ?
REPLY
This is a structured financial product. I avoid all structured products, for the reasons given in this FAQ:http://www.tankinlian.com/faq/sinvest.html
In the document for this product, the issuer said that the "principal protection" does not apply under certain circumstances. Honestly, I do not know how to assess this risk (but it is not something you can just dismiss away) I am also not able to spend time to study this risk. Often, it cannot be calculated anyway. So, I always avoid these types of products.
I would like to seek your opinion on the MQ yield 2.08% product, as advertised in Strait Times . Do you think this is safe ?
As you know, the interest rates for FD is so low. I am thinking of treating this as a FD for 2 years. Coupon 2.08% annually, payable every 6 months.
This is a capital guaranteed. Provided Macqueries Bank does not go burst. This seem unlikely to happen. Can you please highlight other possible risks ?
REPLY
This is a structured financial product. I avoid all structured products, for the reasons given in this FAQ:http://www.tankinlian.com/faq/sinvest.html
In the document for this product, the issuer said that the "principal protection" does not apply under certain circumstances. Honestly, I do not know how to assess this risk (but it is not something you can just dismiss away) I am also not able to spend time to study this risk. Often, it cannot be calculated anyway. So, I always avoid these types of products.
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