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Former CEO of NTUC Income calls for “collective protest”

Posted by theonlinecitizen on May 5, 2008

Former Chief Executive of NTUC Income, Mr Tan Kin Lian, is calling for a “collective protest” against Income’s “bonus cut”.

In his blog posting, Tan says that he “will be asking a lawyer to organise policyholders who wish to submit a collective protest against the bonus cut. This will be sent to the board of directors and to MAS.”

Here are two excerpts from Tan’s blog posting.

We have bought many life insurance polices with NTUC Income that are affected by the recent cut in annual bonus. The reduction in bonus is about 45%. We understand that this large cut will apply not just for one year but for every year into the future.

When we bought the policies, we were given a benefit illustration showing how the future bonuses would be distributed. While the actual bonuses were not guaranteed, we expect that NTUC Income would honour the underlying promise to distribute the bonuses in the manner that was illustrated.

You can read the entire blog posting here: Tan Kin Lian.

To participate in the protest, click here.

Read also: “Tan Kin Lian, an upset Income customer” by TODAY.

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152 Responses to “Former CEO of NTUC Income calls for “collective protest””

  1. Fever Guy said

    NTUC really cannot make it. Never Trust Union Chief. This is very true. They even duped their former CEO. How to buy their products?

  2. errrr- said

    since the CPF affects everyone – what about protesting the CPF scheme – withdrawal from 55 to 62 to 67 to death bed.

    This was also a fracture of what was promised in 1970s and what was deleived in 2008.

    Rgds

  3. Daniel said

    When the PM, MM, SM says it is golden age of Singapore to come. So is this the beginning of golden age ?

    Policy and contract that went back on its words ? Won’t this be precedent for others ? Is this only applicable to government related company ? What if it is private company, will there be penalty/fine from the government ? Is this another case of double standard ?

  4. what??? said

    Mr tan,

    you also earn a good salary last time as CEO. why care so much??? relax lah. i thought only those at the bottom of society & hard press for money for a living will do such thing. any way i bet nothing positive will come out of any protest. all i know is very simple, earn enough money and leave this sick country.

  5. A Supporter said

    Well done, Mr Tan Kin Lian. My family will all support you in
    this collective. Singapore desperately needs more people like
    you to stand up for us. Most of our society’s leaders are
    letting all of us down because of greed for money and power, yet
    shirking their responsibility to the people they are supposed to
    serve. This state of affairs must not be allowed to go unchecked.
    It is time all the fellow sufferers get together and make the
    much need change with a Strong Wind of Change.

  6. Lim said

    hi there, i was an Ex-Employee.

    To tell u the truth, i have seen such extravagrant spending by the management.

    The meeting rooms are all renovated to look like lounges. The CEO’s room is the most impressive. If u dun believe me, do go there and check it out. It’s on the 6th floor of Income Centre.
    The lobby of the 6th floor looks more like a hotel lobby than an office.

    Meetings that were previously held at Kreta Ayer during Mr Tan Kin Lian’s era is no longer happening.

    Meetings are now held at the posh Ritz Carlton, Suntec City, Esplanade, Swissotel Stamford to name a few.

    Management retreats previously held inhouse are now held at posh locations throughout the island.

    I dun see the reason why they need to spend such unnecessary money on all these. It could be better save and distributed to us as bonus.

    Even when the economy was doing so well last year, our employee’s bonus was cut from 2 months to 1.81 months.

    So it is not just policyholders who get the bonus cuts. Employees too. I think probably the senior management will get the fattest bonus.

    The new CEO should declare how much all the senior management personel get for their bonuses. Are you guys aware that most of the senior management people now are from Prudential?? The new CEO has replaced practically most of the general managers with people from his ex-company.

    This is totally unfair. Impressive investment earnings but bonuses cut????

    I was disgruntled with the new management. That was why i left.
    In the past, this was never the case. Under Mr Tan KL, our bonus every year is still 2 months.

    Even during the economic crisis, though our bonuses are cut, we are still getting some unlike other companies with retrenchments.

    Mr Tan KL is a very compassionate person. Even though he is strict with us, ultimately it is for the benefit of all policyholders and employees.

    I still remember when the CPF rate was cut. Mr Tan introduced the 1month leave for employees with 3 years of service. This was such a wonderful benefit. However, since the new CEO has assumed his post, this benefits have been removed with many other good benefits too.

    The new management is spending money like nobody’s biz. It is as though it was like the NKF case.

    [Comments deleted by TOC moderator.]

    Are you aware that the renovation cost of the NTUC Income centre cost more than the $3m bucks mentioned? They should be open with all these transactions.

    Also are you aware that NTUC Income paid for all the new CEO insurance plans premiums amounting to more than $50k each year.

    Are you guys also aware that the marketing agencies that NTUC Income engage cost more than $2m per annum?

    Are you people also aware that the Ho Chi Min tour for the agents cost more than $1m of policyholders money?

    Since the AGM is coming, why dont someone just bring these issues up to the Board of Directors??

    We really need to stop the unnecessary spending for the sake of all policyholders.

    TOC moderator’s note: Dear Lim, your comments are edited to disallow personal information which you posted.

  7. seveneleven said

    Well done Mr Tan. As most of us are not firmilar with the Insurance Scheme and terms but nevertheless had bought them for the sake of the family and future. These big giants had been running in a way that benefit themselves without giving much thought to the customer benefits.
    They have thus learned from our govt by shoving their policies (such as opt out schemes) into the customers throat. I have a policy with NTUC. I will seek your advice in your blog. If my policy is affected, that will qualify me to sign the petition and I will ink my name too.

  8. Eveline said

    >>>you also earn a good salary last time as CEO. why care so much???

    Err, because he’s an NTUC Income customer?

  9. The SS said

    What is CASE doing about it? Does this not warrant a proper PROTEST instead of the wayang recently? Get real CASE.

  10. yee said

    To add on to what Lim has posted, the car that the new CEO drives cost more than $250k.

  11. Gary Teoh said

    Then Dont buy from NTUC, boycott NTUC. You know the Chief Minister of Penang, he took economy class when flying to save cost. spore ministers, I think no body take economy class, tax payers pay for it , who cares.

  12. patriot said

    If only Singaporeans are as sincere as they speak, then please avoid falling prey yourselves. PLEASE DO NOT FORGET YOU ARE THE ONES WHO MAKE THEM(SCHEMERS) SUCCESSFUL, YOU ARE WILLING CUSTOMERS WHO SUPPORTED THEM!

    patriot

  13. civil serpent said

    If NTUC can suka suka change, then at the very least they must allow current policy holders to opt out or terminate the policies.

  14. fairprice said

    same thing for NTUC fairprice – it was painful reading Seah Kian Peng letter in forum today – still does not explain

    why Lim Swee Say tells us not to hoard rice as there were 6 months stock
    Why rice price goes up while cost price for these stock were based on 6 months ago
    Does not matter that prices other commercial entities (eg sheng siong)have already increased – you are a cooperative for our unions, you should continue to ensure you do not profit from the union members in this time of inflation
    I hope the NTUC fairprice will keep its reserves lean and trim – do not aim to be a profit based orgainsation with a large reserves. If that is your intend, stop calling yourself a union cooperative!!

  15. Logicalman said

    As others have said, there’s Giant, Sheng Siong, Prime, YES and others. We are free to choose to shop with them, so exercise your choice wisely.

    If someone were to peer into the details, I won’t be surprised to find that out of every sum of money the Govt spends to “help” the people, a big part returns to her coffers eventually, directly or indirectly through taxes, goods & services provided by GLCs or Govt-controlled union businesses, and bonuses/dividends.

  16. Gary Teoh said

    same logic,$1 you donate to NKF, 10cts goes to he patient.

  17. vap said

    i read the letter sent to inform the bonus change, it explain that the total bonus or value are intended to have little or no change..since it will be compensated by higher special bonus every year. Hence should not have much impact on us as policy holders i think.. No reason to join in the protest.

  18. Fever Guy said

    Are the media going to report this extravagant NTUC chief to the shit times? NKF no 2?

  19. Rog said

    Vap,
    Of course not. Haven’t you heard about the magic of compounding? Policies are usually more than 20 years. What you lose out now in Annual bonuses means they will not be included in the calculation for next year’s bonuses. Think deeper, if it is going to be the same why bother to change and create this storm? Don’t tell me you belong to the proverbial third group of people who “doesn’t know what is happening”?

  20. sarek_home said

    Dear Vap,

    Some reasons for the protest:

    1. Policy holders are not consulted before the decision is made.
    2. Policy holders are not given the option to stay with the old scheme.
    3. What will stop NTUC Incomes from changing the special bonus scheme in the future.

  21. Daniel said

    vap,
    if there is nothing wrong, why should a respectable ex-CEO from NTUC Income help to plan the protest ? Tan knows more about financial service than many of us do and knows what he doing, and I’m sure he uncover something unfair and ridiculous. Really glad that he really do his best to help out. Such exploitative practice must be condone and not tolerate. Such rot in government body must be exposed and not keep in silence anymore.

    Now how about CASE ? The CASE is a complete joke. It is no longer the CASE it used to be . It becomes more like a CASE that NATO. NATO CASE.

    A lot of Singaporean is naive to think that they will not be affected by policy change. How innocent and naive they are ! If they can do this now, will they not do this in future ?
    Did the newspaper help mellow the impact of change ? Better think thrice of reading the MSM then.

  22. Daniel said

    Vap,
    don’t you feel that the letter might be something like GST rebate ? Pure and innocent type of letter because all the work of ‘exploitation’ has been done. After all, the letter must sound like goodies to pacify the people, don’t it ?

  23. commoner said

    Logicalman said:

    “If someone were to peer into the details, I won’t be surprised to find that out of every sum of money the Govt spends to “help” the people, a big part returns to her coffers eventually, directly or indirectly through taxes, goods & services provided by GLCs or Govt-controlled union businesses, and bonuses/dividends.”

    I totally agree on this. Every time they give us something, they will get something back and in a bigger portion. Also, noticed that they will only plan to give us things before election, when they feel politically unsteady or when they have big plans like increasing their salary. Sadly, people are still so stupid to believe them.

  24. Chan said

    Guys,

    Let me explain further if you don’t understand it.

    1) The Special bonus is not given yearly like the reversionary bonus.

    2) It is given after a certain number of years when the policy is surrendered, claim or matured.

    3) The special bonus can be withdrawn as and when at the discretion of the appointed actuary.

    4) They are using the funds to invest in equities because equities are supposedly to earn higher returns than bonds.

    5) In the event, if the equities do not perform, NTUC Income has the right to withdraw the special bonus. Just like what they are doing now.

    6) No one can predict what will happen in 10, 20, 30 years time. How is NTUC Income so sure that they are able to earn a return to pay for the special bonus. What if the equities do not perform as what has happen in the past?

    I think everyone should be awared of this.

  25. commoner said

    “6) No one can predict what will happen in 10, 20, 30 years time. How is NTUC Income so sure that they are able to earn a return to pay for the special bonus. What if the equities do not perform as what has happen in the past?”

    NTUC doesn’t have to be sure of that. The money is yours and not theirs. All they need is to collect your money first to spend part of it on themselves; then, when the time comes, they just say sorry, no earning, cannot give you any special bonus; this is a risk you, suckers, have to bear when you buy our products.

  26. commoner said

    “6) No one can predict what will happen in 10, 20, 30 years time. How is NTUC Income so sure that they are able to earn a return to pay for the special bonus. What if the equities do not perform as what has happen in the past?”

    NTUC doesn’t have to be sure. It is not their money, so why should they be concerned. They just want it now to spend a little on themselves. When the time comes, they just need to tell you sorry, no earning so no special bonus for you and this is a risk you, suckers, must take if you buy our products.

  27. missy said

    After reading string of comments and some research, my understanding is that now the annual bonus is lower, but there wwil be increased special bonus.

    Policyholders not likely to lose out as we get back both the special and annual bonus even if there is early surrenders.The bonuses declared and vested in past years are guaranteed and not affected.

    Perhaps we should look at longer term where the special bonuses may give us higher returns in future

    Nowadays,hard to find Life products in market that offer guaranteed high returns lor.

  28. Daniel said

    missy ,
    if indeed it is so special, why should they want to change it ? Is it a case of giving outfront first, taking more in the future ?
    Give a thought. Remember, this is run as profit-orientated company now.

    Really what so special about it ? Really guarantee ? If they suga suga change contract and you still call it guarantee ?

    So are you so confident of future where there is more turbulences going on ? Have you not think because the future not so secure that why’s they need to change the plan and feed rhetoric to holder ?

    It always good to think on the good side but not to the point that you may be exploited. Let’s not be naive and innocent anymore like Gillian Chung. Strange that people think that if they are shortcharged, it may be for their own good !
    Amazing Singaporean !

  29. Fay Leong said

    Long term equity returns is about 8%
    Long term bond returns is about 3%

    If they invest in 60% in bonds 40% in Equity and other companies invest 40% in bonds and 60% in equity. Don’t need mathematician to calculate who will win in the end.

  30. Ros said

    Apart from the bonus issue, I think the current CEO did an excellent job to renovate Income centres. A couple of years back, I followed my dad to the Bras Basah branch, to make a claim but felt like a weirdo when I entered the building and was thinking to myself that no way would I buy a policy from them. The image gave me a feeling that the policies will be outdated. But when I walked pass the building last month, I told myself that now I might consider enquiring about their products. The new CEO did the right thing to change the image to attract young adults like me. Otherwise, Income can never move 30 years ahead if they were still into the old arena.

  31. Cindy said

    “Even when the economy was doing so well last year, our employee’s bonus was cut from 2 months to 1.81 months.

    So it is not just policyholders who get the bonus cuts. Employees too. I think probably the senior management will get the fattest bonus.”

    Someone posted this comment, but it doesn’t seem to be the complete picture. I have a few friends who work there and they told me that they have this banding system of grading staff from A to E. Low performers in D and E will get only the corporate bonus of 1.81 months. Performers from C to A (I think more than 90% of staff) get additional performance bonus on top of the corporate bonus. I think majority got 2.51 months, where is the cut?

    Seems like a good step to acknowledge and reward the good performers.

    It seems like the person posting this may be a low performer D or E, that is why from his/her perspective, the bonus actually shrunk. This makes me wonder whether all comments posted by this person is due to his own unhappiness over this.

  32. fern said

    I am also an Income policyholder, in fact my whole family, for the past many years.

    I got to give them credits for making the bold steps of revamping themselves, to be different from what they once were, making the move to differentiate themselves. I have to say, marketing, advertising, renovation etc are all part of the change management. how else to stand out and compete in this more and more competitive society if they are still so laid back. I believe strongly the management is a far sighted one, not one who thinks of the near future.

    even if the decision they have made may bring about so much hooohaa (which I think they could well expected it and well ahead with it), it’s for the better of the policyholders and the company. let’s just be patient and wait to hear what the new CEO has to say, and not jump into accusations and worse, hurling of abuse which in my opnion is really personal and unprofessional.

  33. Nemo said

    Aiyah, this battle is so clear cut.. In ABcdefg terms… there are some people who just cannot accept that NTUC Income has a new CEO after 30 years!!!!!!!!!! and he is making so many changes that the ex-CEO possibly didn’t even think of???

    I mean logically which competitor won’t be afraid when the launch of his 2 new products (revosave and vivolife) is creating so much of spark suddenly.. All these unhappy people are of course Income’s competitors la, or customers who unfortunately had a bad encouter with NTUC Income (so this is the time to take revenge)…. or maybe Tan Kin Lian’s buddies or school-mates??, the die-hard fans of the Kin Lian from 30 years ago.. ok, these fans must be really old then!! haha

  34. Moses Lim said

    Long long time ago in a part of Tang Shan, there was this woman named Lucy. As this woman has been around for a long time, out of respect, people in the town would call her Auntie Lucy.

    Aunty Lucy was married to her husband for about 30 years but because of irreconcilable differences, they divorced and she found herself a new husband.

    This husband is different from the old (not to say good or bad) and she started to put on make up and wear nicer clothes and instead of staying at home and collect a fixed allowance from her new husband every month, she decide to go out and work and receive a higher pay instead.

    One day, her ex husband see her and start scolding her. He told her that woman should not wear nice clothes or put on make up. After all, its the inner beauty that counts. The outer appearance do not matter. And she should stay at home and collect fixed allowance instead of going out to work to earn more. After all, outside is big wind and big rain, she might make less instead of making more than the allowance she would get from her husband.

    Hmm..do you know what is the moral of the story?

  35. gorgorsitioeh said

    Hi Mr Tan, thank you for your insightful advice to many disadvantaged policyholders of NTUC Income, many of whom (I think) would probably be as disgrunted as you at present. I am not a policyholder of NTUC Income, and I will not take up any policy from your former company in future because of its encroachment of consumer rights, the very reason of your “protest”.

    However, like some people, I am intrigued as well as to why you have suddenly become a crusader for your former company’s policyholders. You are, or rather, you used to be a NTUC Income man (since you had chosen to draw a clear line to deviate yourself from the present management team by not commenting on the new policies introduced after your departure), and you didn’t leave the company for a very long time, so as to speak.

    It makes me wonder if you have some other motive for doing this, whether it is political/personal or not, or whether you have substantial solid backing to make such a loud statement on your blog as well as on a government-friendly newspaper. After all, you used to be a NTUC Income man.

    I hope your “protest”, is after all, a genuine and sincere one, and I wish you good luck.

    Once again, thank you very much.

  36. Ah Huay said

    I think Mr Tan Kin Lian has demolished his own kingdom by his foolish reactions. Alot of people are having second thoughts about him now due to this issue. Just because he has 2 policies with Income, he is taking it out on the management. I believe if his policies are with a different insurance company, he wouldn’t bother as much or wouldn’t bother at all.

  37. singapoor said

    mas selamat escape… nicol highway collapse… NKF…

    do you notice a trend in all these?

    before every major screw-up involving an organization and/or a group of people in Singapore, there will be fascinating and remarkable legends and folklores we always hear about the organization and/or group of people about their successes, achievements, records, hits and efficiency.

    then when a major screw-up happens, everyone start wondering why it happened and more than often reel in disbelief that the hurculean organizations and/or group of people could bring about such misfortune and loss with such incompetence and stupidity. some singaporeans will continue to dismiss the screw up each time and naively refuse to believe it ever happened.

    given this reality, one then needs to ask how many of our “golden and world class” organizations and groups of people are as true as what they are made out to be. are they really No.1? are they truely the best? are they truely great? do we really have to wait for a major screw up to come to the attention of public before we understand all this? only time will tell…

    the former US ambassdor in his farewell speach said that Singapore is a 21st century country with a 20th century administration. at least he understood the realities in Singapore well enough than most singaporeans.

  38. Candy said

    I am slightly different from gorgorsitioeh. I have a life policy with Great Eastern for about 17 years. All these while I didn’t know how many % annual bonus I received. Bought for peace of mind and for long term. “Bonus distribution structure” is an alien concept.

    What is more important is our trusted banks, which have been with us since we were young.

    They give terribly low savings rate at 0.25% to 0.4% and are not required to write to inform us when they adjust their rates, and we happily bank with them.

    If there is an advocacy group for or should I say “against” the banks, I would be interested to participate more actively.

    Any volunteer ?

  39. NTUC Policy Holder said

    “Apart from the bonus issue, I think the current CEO did an excellent job to renovate Income centres”

    Do not equate too much value in surface frills, bells and whistles which will not add very much to your pockets. Nice to look at and very subtle to mould perception, they can never beat the actual value (e.g bonus in this context) which is being received by you. Once you have received the actual value, you can then splurge on your own frills, bells and whistles.

  40. Daniel said

    singapoor,
    “It’s the citizen. What to do ? It happened”

    Instead of finding substance, they find image more interesting. Nobody says that image is not important and sure it make a good selling point. It is the exorbitant money that spend on image that should concern the people. Has the image beguiles the real substance ?

    Anyway, since these people are contented and so confident that NTUC will take care of them like our government, so let them be.

  41. happygolucky said

    As a frequent poster at Mr Tan’s blog, and an advocate of buy-term-invest-the-rest, I am actually quite dismayed by his behaviour these days. What turns out to be a great blog educating people about the concept of buying term has degraded to one of sensationalization and filled with personal agenda.

    Below is a summary…

    He says: Revosave and Vivolife are expensive products, and in the past he sells products of good value.
    Fact: In the past, there were Anticipation and Living. Both are actually similar products. My IFA showed me the distribution costs in the quotation and there are actually quite similar.

    He says: Only buy Term
    Fact: In the past, he held the helm of NTUC and sold a variety of products, not only Term. I questioned him many times, but the issue was always skirted.

    He says: Only buy index funds and low expense funds.
    Fact: In the past, he held many educational talks and ask people to buy NTUC funds. My father bought the funds too (old school la…listen to the man), and it seems the sales charge is the same, last time and now.

    He says: Bonuses cut by 45%
    Fact: This is true, but sensationalized. Creative manipulation of numbers, something we all learnt in school.

    He says: Agents loved him
    Fact: More agents quit while he held the helm (think I saw this in ST, anyone recall?).

    He says: He has engaged a lawyer for this issue
    Fact: He doesn’t even have a case, since there isn’t a breach of contract (based on my mediocre legal understanding) and I read on ST that MAS and NTUC Board is in-the-loop. So what is this really for? Hmmm…I remember Mr Tang Liang Hong went to file a police report some years ago against SM Goh?

    Based on my reasoning and interpretation, I really find it hard to accept it is an altruistic act. I follow his blog regularly and read that he is a consultant to a new insurance company. While I look forward to it (hee…competition is always good), I cannot help but put one and one together.

    Saddam may be a devil, but Bush is no angel too 🙂

    For those with policies, don’t be blinded by anger. Don’t be a victim of politicians at work. If got time, go to the AGM and hear out the different parties. Judge for yourself. If your policy still in infancy, don’t terminate to spite the company.

    Never be overly trusting…leave the politics to the politicians.

  42. sadgoesunlucky said

    This is a reply to Happygoeslucky

    Things change, people change. Sometimes thing never change but people still change. I used to drive on the right side of the road when I was in Singapore. But now, I am in US and I have to drive on the left side of the road. I am still driving a car on the road but why do I have to drive on different side of the road? Because I am in different countries ma.

    Its the same thing with this classic trick question.

    Three men decided to split the cost of a hotel room. The hotel manager gave them a price of $30. The men split the bill evenly, each paying $10, and retired to their room.

    However, the manager realized that it was a Wednesday night, which meant the hotel had a special: rooms were only $25. He had overcharged them $5!

    He promptly called the bellboy, gave him five one-dollar bills and told him to return it to the men. When the bellboy explained the situation to the men, they were so pleased at the honesty of the establishment that they promptly tipped the bellboy $2 of the $5 he had returned and each kept $1 for himself.

    The Problem: Each of the three men ended up paying $9 (their original $10, minus $1 back) totalling $27, plus $2 for the bellboy makes $29. Where did the extra dollar go?

  43. happygolucky said

    This is a reply to Sadgoesunlucky,

    Lol. Classic quiz man. Each man actually pays $9.33 and $2 goes to the bellboy. To solve the problem, the trick is not to read “The Problem”. i.e. sometimes, we shouldn’t focus too much on the problem that we lose track of what is happening.

    I respect your point of view, but somehow I feel things are not what they seem on the surface. Somehow, I didn’t think our world changed that fast that a man can take a drastic turn in a span of a few years. Maybe I am too suspicious, but most importantly is to think what matters for yourself.

    For those affected by this saga, when the dust has settled, better to cool down and think of what to do next. Don’t be swayed by others who may have their motives.

  44. Lim said

    The basic 2 months bonus tier has been cut to 1.81 month for staff. That is a fact.
    Otherwise, the staff would have gotten an even higher tier depending of the banding.
    It doesnt matter which band i am in.
    The fact is we should have all gotten 0.19 months more if not for the fact of the bonus cutting.

  45. Daniel said

    “The Problem: Each of the three men ended up paying $9 (their original $10, minus $1 back) totalling $27, plus $2 for the bellboy makes $29. Where did the extra dollar go?”

    You are right. It is a matter of perspective. The answer is that $27 is the final cost all three pay inclusive of tips to bellboy. Hence $9 for each payer. Rest of $3 passed back to the payer so not counted.

    Never was there a extra dollar since $2 tips shouldn’t be added to the final cost in the first place since it already included in the cost. Maybe that is kind of creative accounting and manipulation apply by coffers ? Did late President Ong find something similar thing with government’s accounting ?

    No wonder PM clown says people do not understand the policy. Maybe that’s the kind of policy he preaches.

    hmmmmm….

  46. Iron Man said

    In any organization, change is inevitable with any change in senior management. Income is no exception.

    In the banking industry, DBS is undergoing such a change with Jackson Tai, its former CEO leaving the organization to be replaced by some former Citibank banker. There are market rumours that he will be bringing in his closed aides from Citibank to replace those who have left.

    Income has been getting quite a fair bit of public attention lately, both good & bad. But I must applaud the current management team at Income for having the courage to take over where Mr. Tan Kin Lian has left after 30 years at NTUC Income & for making the bold changes which would not seem possible under the old regime.

    Mr. Tan Kin Lian has left a 30 years of legacy to the new management.Inevitably, people will judge new management style & compare with the old. But I think to be fair, let’s judge the current management team at Income based on their results & not jump to conclusion. I am sure that if the new management can bring Income to greater heights, all its policyholders will benefit.

  47. Rog said

    Moses Lim Says:
    May 7, 2008 at 4:16 pm (Edited to reflect greater accuracy and better grammar)
    Long long time ago in a part of Tang Shan, there was this woman named Lucy. As this woman has been around for a long time, out of respect, people in the town would call her Auntie Lucy.

    Aunty Lucy was married to her husband for about 30 years but because of irreconcilable differences, they divorced and she found herself a new husband.

    This husband is different from the old (not to say good or bad. He led a vivacious lifestyle and spent alot of time bonking her in posh hotels and exotic retreats and smoking pot. Very soon, they ran out of money and he taught her to start putting on make up and wear nicer clothes and instead of staying at home to look after the children she has to go out and work in a massage parlour to earn a higher pay instead. Alas, she learned too late that the good money does not come in just because of the massage…

    One day, her ex husband saw her and started scolding her. He told her that woman should not wear nice clothes or put on make up and lead an immoral lifestyle. After all, its the inner beauty that counts. The outer appearance and the enjoyable lifestyle do not matter. And she should stay at home and look after the children instead of going out to work to earn more. After all, outside is big wind and big rain, she will do better looking after the children and the next generation in leading upright lives than pursuing flights of fancy and momentary pleasures, even if it makes her new husband happy. Furthermore, she should remind her new husband to be prudent and not be a wastrel for the sake of the children and not to lead a decadent lifestyle. By the way, the new husband should also spend more time with the children instead of ignoring them even when they try to communicate with him. Last but not least, the new husband should be fair to Auntie Lucy’s children even though they are not his.

    Hmm..do you know what is the moral of the story?

  48. Rog said

    Ros Says:
    May 7, 2008 at 12:48 pm
    Apart from the bonus issue, I think the current CEO did an excellent job to renovate Income centres. A couple of years back, I followed my dad to the Bras Basah branch, to make a claim but felt like a weirdo when I entered the building and was thinking to myself that no way would I buy a policy from them. The image gave me a feeling that the policies will be outdated. But when I walked pass the building last month, I told myself that now I might consider enquiring about their products. The new CEO did the right thing to change the image to attract young adults like me. Otherwise, Income can never move 30 years ahead if they were still into the old arena.

    Ros, you are indeed a weirdo if you won’t buy a policy just because you entered the Bras Basah building a few years back. There is nothing wrong with the building several years back, let alone a few years back. You fail to look beyong the facade of things and realise real value. You belong to the subprime group who prefers to pay $30 for a plate of kway teow and shun the $3 plate of kway teow because the place looks nicer. Focus on the value of the product and not the facade of the building. If all young adults in Singapore think like you, Singapore is finished. Kaput!!!

  49. AMW said

    Lim Lim Lim,
    You have definitely not put the facts into a correct perspective, neither have you given the full picture. It is a fact that more than 90% of staff has gotten a higher variable bonus than before. Did you mention that? Or did you choose to make people believe that the staff suffered a cut.

    And you have phrased it such that the bonus is a right rather than something you will get if the organisation has done well and that the staff has been a part of it. Obviously, bonus is not simply given because the economy was doing well, the organisation has to perform well at the bottomline. You probably do not even how the bonus was derived but attempted to flaunt your ignorance here misleading people into believing that there was a cut from your narrow point of view.

    It is similar to the current issue here: annual and terminal bonus. Everyone is focusing on the cut in annual bonus, ignoring the increase in the terminal bonus scale with disregard to the total package. Like in the case of your so called cut in employee bonus, you need to look at the total variable bonus they got, over 90% got more than 2 months, but you keep drilling and harping on the 1.81 bonus, why didn’t you talk about the performance bonus??? You didn’t know or you delibrately didn’t want to share that part to make your ex-organisation look bad?

    My advice to you is to keep your identity as secret as possible, Otherwise if it is exposed, its a career suicide for you. I wonder if any employer will dare to engage you in future. With your level of integrity and the kind of information you share (to begin with questionable and doubtful), it shows much about your professionalism and your work ethics.

  50. anonymous said

    How many of you are writing from the offices of the NTUC group?

  51. Mandy said

    During TKL’s management, he started a lot of non-insurance related ventures such as BigTrumpet, Snow City, Singapore Dress,call centre One, investing in personal interest items like Logic9, master remote control? Year after year, these has been loss making business. Who do you think paid for it? From his pockets? Is this not another way of ‘squandering’ your money unknowingly? Did he tell all of you? Did he sought your advice publicly? Was he acting within your resonable expections?

    I pity the new CEO who came in and stop the further bleeding. No one even thank him for clearing up the rubbish.

  52. Ros said

    Rog says:
    Ros, you are indeed a weirdo if you won’t buy a policy just because you entered the Bras Basah building a few years back. There is nothing wrong with the building several years back, let alone a few years back. You fail to look beyong the facade of things and realise real value. You belong to the subprime group who prefers to pay $30 for a plate of kway teow and shun the $3 plate of kway teow because the place looks nicer. Focus on the value of the product and not the facade of the building. If all young adults in Singapore think like you, Singapore is finished. Kaput!!!

    Rog, hmm, let me guess your age… you must be someone who is about 60 years old? the slightly educated who knows how to blog and is doing so in his retirement age? Otherwise, you would agree that it is not about value products anymore. In this century it is about creating and sustaining a professional image (environment), good presentation skills and excellent service. All these are essential ethics to “Move Forward!” With quality products alone, nothing can be achieved in decades.

    The product can be of best value but if there isn’t a proper follow-up in service, no one will continue to buy from that company. Everyone wants to eat $2 noodles but if another stall sells the same noodles for $2.50 with better ingredients and a cleaner environment, people won’t mind paying for it even if it would cost them $3 for that matter. Maybe you belong to the ‘cup noodles’ category!

    Even You Tiao these days come in different flavours, why? Is it because people don’t like the original You Tiao anymore? No, it is because they are moving ahead to cater to the different groups and levels of people! And we are talking about the pioneers who created the original You Tiaos (recently published in The Straits Times).

    Why is PM Lee urging all Singaporeans to step up in whatever they are doing otherwise we will all be left behind. Singapore will only be finished if all the people think like you!!!!!

  53. suka suka change said

    I agree with Iron Man up to a point. Yes, let the new management do their job. But I say leave the old current policies alone based on what was promised in the sales pitch. Make the changes only in new policies that will be sold henceforth. Cannot suka suka change halfway thru the game plan right – unless you think you are Lee Kuan Yew and want to hold my CPF money till I am 80 years old!

  54. family man said

    I am not from NTUC.

    Mr Tan – whatever others may say about your intent and conspiracy theory, I as a public consumer, wants to thank you for writing and sharing your thoughts and educating the populace. Do continue to write and while others may doubt your intent and sincerity, continue to write to help the less educated in finance.

    If your heart is in the right place – no worries.

    I read this quote somewhere ” Never explain yourself to anyone. Because the person who likes you doesn’t need it, and the person who dislikes you won’t believe it.”

    Much thanks!!

  55. neung said

    I applaude Mr Tan Kin Lian’s action for trying to stand up for what he think is wrong. But pardon me for some of my personal opinions.

    Mr Tan Kin Lian has mentioned that he wish to collect 1000 signatures for his petition and overturn the bonus cut. I am one of those affected by the bonus cut as well but I guess I will not be signing the petition that soon.

    Give me 20 years when my policy matured and if the returns are really worse off, I will be the first one to march down to NTUC Income and demand an explanation. I am willing to give the new management time to prove that the change is for the better.

    After all, I trust Income well enough in the past to buy a policy from them and I do not believe a change of CEO will affect my trust in them anyway. One person do not make the whole company.

    While I respect those who has or will sign the petition, I do similarly hope that they will respect my views as well. I am not sure how many people will be affected but let’s say there are 50,000 people being affected. Out of these 50,000 people, 49,000 are ok with the change. Do we really need to overturn the bonus cut because of this? This is not an en block sale where minority can win. The welfare of the group is always greater than the sum of its individual.

    I read that Mr Tan Kin Lian wish to consult a lawyer. I not sure whether he really has a case for that but if a lawyer is involved, who will pay for the legal cost? Income will need to engage a lawyer as well and this will cost money as well. Wouldnt it be seen as spending more then? Its just ironical that here we are arguing that Income is spending too much and yet we are doing something that will make Income spend more. If we can settle this peacefully, it will be better for all.

  56. anonymous said

    anonymous Says:
    May 8, 2008 at 9:10 am
    How many of you are writing from the offices of the NTUC group?

    I wonder how many of you are writing from the offices of AIA, GE etc

  57. Michelle said

    Neung has made a very good point. While I applaude Mr Tan for standing up to what he believes in and certainly think that he is doing this for the people, and not for himself, I do have plenty of reservations on the protest.

    It is easy to get aggressive and emotional over this issue and act hastily because the decision of lower annual bonus is by nature an unpopular one. But I have read the FAQs, considered the merits of freeing up the capital for the management to build up a larger pool of assets over the long run.

    Therefore, I will not join in the protest because it is premature to decide now, but I will go down to the AGM to have a better understanding of the issues. So far, other than the FAQs, we have not really heard from the management on a lot of accusations in the blogs, I will like to give them a chance to do it at the AGM.

  58. Tan Kin Lian said

    What Mandy (post 51) said is similar to what Tan Suee Chieh said in his media interviews. So far, I have avoided commenting on what TSC said, to avoid interfering with his management.

    If I remember correctly, the so called non-core businesses of Income (except for Snow City and Singapore Dress) did quite well over the years as follows:

    > they were operated viable
    > they contributed to the branding of NTUC Income
    > most successful were the car sharing and home repair services

    All of these businesses were started with the approval of the investment committee of the board of directors.

    Snow City and Singapore Dress made a loss of perhaps $5 million in total. This is more than offset by the gains from other investment decisions made during my management. I have left a surplus of $650 million to my successor.

    I am particularly annoyed that TSC mentioned in a Straits Times interview that he had to discontinue the funeral services business. I wish to ask TSC to tell how much money was lost on this non-core business (if it really existed).

    I hope that people like Mandy (who could be a fictitious name) do not slander me unfairly.

  59. Tan Kin Lian said

    Ah Huay (comment #36) said, “Just because he has 2 policies, he wish to take it out on the management”.

    This is an unfair remark. I suspect that she is a fictitious person, speaking on somebody’s behalf.

    When I was notified of the bonus cut on the 2 policies, my first reaction was to terminate both policies. I can afford to write off the loss.

    If I have done so, there is no grounds for me to take up this issue. I would be letting down many of the 310,000 policyholders who would be unhappy with the bonus cut. Some of them might not realise it now, but might be angry when they learn about it later.

    I decided to keep the two policies and take a stand against the bonus cut.

  60. Raymond said

    If NTUC feels that cutting annual bonuses will bring about a better future and more special bonus (non guaranteed) upon maturity, then it should offer a public debate for its policy holders. NTUC Income is NOT Prudential.

  61. Rog said

    Ros said:
    Rog, hmm, let me guess your age… you must be someone who is about 60 years old? the slightly educated who knows how to blog and is doing so in his retirement age? Otherwise, you would agree that it is not about value products anymore. In this century it is about creating and sustaining a professional image (environment), good presentation skills and excellent service. All these are essential ethics to “Move Forward!” With quality products alone, nothing can be achieved in decades.

    The product can be of best value but if there isn’t a proper follow-up in service, no one will continue to buy from that company. Everyone wants to eat $2 noodles but if another stall sells the same noodles for $2.50 with better ingredients and a cleaner environment, people won’t mind paying for it even if it would cost them $3 for that matter. Maybe you belong to the ‘cup noodles’ category!

    Even You Tiao these days come in different flavours, why? Is it because people don’t like the original You Tiao anymore? No, it is because they are moving ahead to cater to the different groups and levels of people! And we are talking about the pioneers who created the original You Tiaos (recently published in The Straits Times).

    Why is PM Lee urging all Singaporeans to step up in whatever they are doing otherwise we will all be left behind. Singapore will only be finished if all the people think like you!!!!!

    ————————————————————————————————
    You guessed wrongly. It is like saying MM Lee is 110 years old. Slightly educated? If you consider a post-graduate degree with the experience of having taught thousands of Professionals and Managers from Fortune 500 companies around the world as slightly educated, then so be it. No, I do not consider this blogging, I am just writing in my comments when I see weird things happening. You went on to list some essentials that were Imperatives in the last few decades of the last century and try to pass it off as new ethics for this century. Wrong again. As a matter of goodwill I will share two of the Imperatives for this century and in particular for NTUC Income. They are Employee Engagement and PolicyHolders Engagement. These are sorely lacking as evidenced by the numerous online feedback from these two groups.

    Your second paragraph ranted on “noodles”. The fact is during Mr. Tan Kin Lian’s time the “noodles” cost $2 and is considered cheap and good so it is value for money. Plus he throws in freebies like connecting us with repairmen so we do not get conned by fancy workmen out there who are more adept at spinning tales than doing the actual plumbing and charging exorbitantly for it. He also introduced low-cost activities like fitness centres to ensure we stay healthy through exercise after eating his value noodles. Now that is service.Thank You, Mr. Tan KL. Now the noodles cost $3 and the service is lousy. I have no cause to complain about my numerous policies the last twenty years but now I have to complain every month since last year. “Cup category”, again if you consider flying on Business class and being chauffered in limousines between airports and Shangri-Las and Grand Hyatts of the world as “Cup Category” then so be it.

    Your third paragraph is weird. We wanted choice. Variety is for choice, not vice versa. So provide variety for choice, yes, hence do not take away choice by leaving us no choice through applying a blanket reduction without giving old policyholders an option.

    Your fourth paragraph shows your insecurity by bringing in our PM. Of course we must step up, with or without our PM saying so. But we seem to be stepping down, not up. Service has gone down. That is the problem. That is why there is this big hoo-hah when all is quiet for the last 30 years. Last but not least, I think MM Lee will have less worry for Singapore if all thinks like me. Why? Because Ros will be less weird and we do not have to import so many foreigners then. 🙂

  62. Annoymous said

    i know the contractor who supplied office chairs to NTUC Income during their renovation.

    I didnt want to say it initially. But after visiting Tan Kin Lian’s blog. I think i have no choice but to say it already

    The chairs in the board rooms (beside the CEO’s room), each of the chair cost about $2,000. Although it is not made of gold, i question the necessity of extravagant.

    A $200 chair and $2,000 chair to me, does not make a difference on how comfortable they are.

    There are a total of 20 chairs in the Board room. You do the calculation and you will know how much they spend on the chairs alone.

    A cooperative spending policyholder’s money in such manner.

    NKF only spend $900 on a gold tap and people are making so much noise.

    Someone should audit NTUC accounts. All these will definitely be made known to the public. I am sure NTUC still keep the receipts.

  63. Raymond said

    Golden plated chairs anyone? 🙂

  64. Tan Kin Lian said

    NTUC Income also had another non-core business, i.e. to manage a shopping mall. The willingness to handle this activity gave us the reason to invest in Eastpoint Shopping Mall in 1998. We bought the shopping mall at a good price.

    Over the past ten years, the value of the shopping mall must have appreciated by more than $50 or $100 million.

    Taking this into account, the overall business results of the so-called non-core business has been healthy. It is wrong to described them as “bleeding”.

    The non-core businesses are managed by separate people, and do not distract the insurance people from running the insurance business. Our intention, at that time, was that the “more than insurance” business will help to strengthen the branding of NTUC Income.

    I respect the decision of the new management to take a different focus, but I asked that do not refer unfairly to the “bleeding” non-core business.

  65. Yu Xin said

    Mr Tan,

    Wow $1,000mil! Can I know how this surplus number can be traced in the annual report? They publish their annual report online, I saw the FY 2006 one there.

  66. Eveline said

    @Anonymous at 62:

    I can guess what those chairs are. Supposed to be very comfortable.

    In fact I’ve seen the same kind of chairs in a particular stat board. Oops.

  67. Children of Lucy said

    Wow, a chair costing $2,000? No wonder Auntie Lucy need to put on make-up and dress up to work. But don’t cut our allowance lah just because you want to rest your bloody bum on a 2K chair. What? not only 2K. oh, I forgot you have 19 other brothers whose bums need to rest on altogether 40K worth of chairs. No wonder now we get only 1.3% for what our mother has promised us all along. No wonder our mother is bleeding. What should we as children do for our mother when she gets such a husband?

  68. Children of Lucy said

    WOW, 2K for a chair? No wonder Auntie Lucy has to wear make-up and go out to work lah. What? Not 2 K but 40K for the new husband and his 19 brothers? Please lah, tolong, tolong lah. Dont cut our allowances just because you want your bloody bum to sit on 40K chairs. Our mother has promised us good allowances when we were born and now you want to cut by half when our mother is actually earning good money? All because you think you are tuakee! Do not mess around with our inheritances from our good father okay! What do we do when our mother still has to work so hard when she is so old, some more have to put on make-up? We have to take action this end of the month at the AGM and STAND UP for our MOTHER.

  69. teapot said

    hmm think gold plated chairs are much much more expensive leh. Gold price still quite high now.. 🙂

    Nowadays where to find cheap and good things?? Go COurts or ikea walk around, a decent office chair no longer $200 liaos..

    Hmm.. Cheap things no good, good things no cheap… how often an organisation will undergo major renovation or change furnitures?

    Policyholders who really are concerned about this issue could probably spend some time studying the FAQ, read and understand on how this bonus restructuring works, or await for formal response from the company rather than commenting the irrelevant. (ie. cost of office chairs)

  70. Annoymous said

    When the NKF saga first erupted, people include our health minister assured that everything is all under control….

    How did the NKF saga came to light?? After it goes to court and confidentai information has to be revealed.

    I really hope this case goes to court and all those hanky panky things that are kept under carpet will be revealed.

  71. Coffee Pot said

    Still have to wait after one and a half months since the declaration of Bonus? Come on, TeaPot. The new management of Income better shape up or is the frequent management retreat making them all soft including their bums that are used to the soft caress of the 40,000 dollars chairs that they are sitting on. Co-operative my foot!!!

  72. Abandon said

    Hi Friends,

    I would like to add my humble opinion regarding this bonus restructuring issue. When Tan Kin Lian was the CEO of Income, the Singapore economy and our social fabric were very different from what it is today. Things have changed much, and may perhaps continue to change faster.

    Do any of us remember a time when the prices are increasing as quickly for such a sustain period of time? Before 2007/2008, the highest rate of inflation is at a manageable rate of 3.1% recorded in 1991 for the past 20 years. Moreover, prices of the most important goods and services such as transport, health care, and food have skyrocketed by more than our inflation rate of 6%. For most part, the high inflation rate is and will remain beyond our government’s control and is mostly due to unpredictable global forces. Even our PM (Today newspaper 07/05/08) is not sure how our economic growth and inflation rate will panned out. I guess we can agree that global prices are more volatile and strong inflationary pressure is becoming a global trend.

    Coming off a year of unprecedented inflation and financial turmoil has reminded me how important it is for Income to reshape its bonus structure to increase the flexibility of the par fund. At the current rate of inflation, $100,000 30 years later will have the same purchasing power as $17,400 today. Insurance policies are designed to be long-term protection/investment/savings instruments and I want my policies to reflect the economic realities over the long term.

    I understand from the press that Income will be able to diversify our money into higher growth assets such as equity and property (if the need arise) with the bonus restructuring. It is a fact that equity and property can survive and thrive much better than bonds in a high inflation environment. For the policyholders, I guess restructuring the bonuses is most unpopular in the short run but most rewarding in the long run. Income is doing the right thing by opening the option to invest more of its assets in equity and thus, protecting the policyholders in the event of unabated inflation. I also believe that this would improve Income’s solvency and this is great for the policyholders. Who doesn’t want the company handling his/her money to have as many As from S&P as possible?

    I would like to borrow JFK wisdom, “There are risks and costs to action. But they are far less than the long range risks of comfortable inaction”.

    FYI: The Life Insurance industry is one of the most tightly regulated industries. Income or other insurers do not have the discretion to squander your money anyway they like. Income is rated AA by S&P since 1999.

  73. Income Policyholder said

    Spending 40 thousand dollars on 20 chairs to the very rich is probably peanuts. But to the masses who are Income’s customers it is more than a year’s living expenses. Is there a need to be so extravagant? No doubt there is regulation. There are also regulations in NKF and the detention centre. That did not prevent problems even though ministries are involved. Rogues are getting bolder and ministries are getting complacent.
    There is this element of Time Span of Discretion at play. It is not like having a front-line staff whose performance can be immediately seen at the end of the day when something is wrong. For example: if you hire a lousy receptionist, the complaints will come in from the walk-in customer and the phone-in customer if the service standard is not up to par latest the very next day. If you hire the wrong CEO, the time before one knows that something is wrong is probably years. For example, Enron, worldcom and the various financial upheavals took decades to unwind. Closer home, the China Aviation Oil debacle as well as the NKF saga also took many years to discover. Regulation is one thing. Like you said times are changing, it is no longer so simple. I think NTUC Income should be audited to see where the 10.7% profits made in 2007 has gone to in order to allay the fears of the general public in general and to give “Peace of Mind” to all its policyholders in particular. Otherwise this will be detrimental to the image of the insurance company as well as the reputation of our highly regarded labour movement which is synonymous with the national leadership of Singapore.

  74. pillow said

    I am a staff and i can verify what was said about the $2k chairs are true.

    Its about $1k plus to $2k. Only the board room has those chairs. I am not so sure about the numbers. But i think it is more than 20 chairs.

    The board room is next to the CEO’s room. As staff members, we are not allowed to hold our meetings there nor are we allow to enter the room without permission.

    If you all happen to drop by during the AGM, do go to the 6th floor to take a look. But dunno whether the security guard guarding the floor will allow you to enter. haha.

  75. Clarifier said

    10.7% mentioned is the investment returns not profits. Anyway, I am quite sure that NTUC Income’s accounts are audited. The returns sits back into the par fund owned by policyholders, which is a highly regulated fund by the MAS. It will not simply disappear.

  76. Kim said

    I’ve been following the annual bonus cut issue with interest, not least because I am also an Income policy holder as well.

    But let me first share some of my thinking on some related issues.

    TKL advocated philosophy of buy-term-invest-the-rest in a low charge well-diversified fund is well known. And generally, I think it does make sense (although I do wonder much why TKL was much less vocal on that when he was head honcho in Income). Now of course, if everyone becomes convinced of this and started doing so, many insurance agent rice-bowls may be at sake (or at least much less lucrative). Hence, naturally, many insurance agents are less-than-thrill by anyone who strongly advocate such thinking. This is understandable.

    But slowly, as the financial market matured with more people becoming more financial savvy and knowledgeable, we may just see the trend slowly moving in the direction that TKL is advocating, with term policy enjoying increasing popularity (at least from the demand side.)

    (It may be interesting to get some figures/statistic on the insurance market pattern/trends in countries such as North America and Western Europe as they are ahead of us in this area, and we probably can learn a thing or two from them, including the trend likely to evolve as the man-on-the-street becomes more educated and financially savvy.)

    I think it’s good that TKL’s blog has been educating readers on financial matters. Education and knowledge is one of the best key to protect the interest of the masses. And thus to me, anything that results in customer being more knowledgeable to make an informed and well-considered decision cannot be too bad. For example, regulations introduced in the past years by MAS to get insurance agents to include in their Benefit Illustration the cost of deduction and also having a cooling-off period during which the customer can back-off are all positive measures that tilt the “balance-of-power” in favour of the customer who typically has less info and prior knowledge vis-à-vis the insurance agent on the financial instruments being marketed/pushed. Personally, I have benefited from both these measures in at least one my recent financial decision making.

    Now, coming back to the current issue of annual bonus cut, my stand and philosophy is simple. A bird in hand is better than 2 in the bushes. Period.

  77. Sam said

    Amazing how a bonus re-shaping exercise of one insurance company can evoke so much reaction from the public (including insurance practitioners, ex-CEO and his followers, present and ex-employees and onlookers who just want to join in the crusade of the company). Surely, NTUC Income has touched the hearts of many and undeniably a Singapore icon!

    Just feel that many of comments posted in this site and various blogs/forums are uncalled for.

    Correct me if I’m not wrong, several remarks are laden with sacarasm and cynicism, which gives people (well, at least one, that is me) the feeling that the posters are irrational, emotional and many, rattle off without much thinking or even getting the basic facts.

    Some have even gone offtrack talking about the actuary’s “arse”, gold taps, office chairs, renovations, incentive trips, new vs old management, cooperative = iron rice bowl (nothing cannot be further from the truth!)

    Whilst others have come up with succinct arguments both pro and against, I thought those have provided good debate over the subject matter.

    I, for one, disagree and doubt the substance of the TKL petition. Here’s my reasoning from a layman’s point of view:

    He says: We have bought many life insurance polices with NTUC Income that are affected by the recent cut in annual bonus.
    How I see it: To put in perspective, TKL is getting 1,000 supporters. However, the total
    number of policyholders affected is over 300,000. That’s not even 0.5% of the overall number! How strong then is this collective protest of a mere minority?

    He says: The reduction in bonus is about 45%.
    How I see it: In fact, the annual bonus is re-shaped from 2.3% to 1.3% of the sum assured. This is a 1% reduction which is being deliberately interpreted as a 45% cut by the critics. Someone said that the description of a 45% cut is sensational and alarmist. And I totally agree.

    He says: We do not accept this unilateral change. We do not like the new bonus structure.
    How I see it: Whilst free expression of views are fine, I do not think that any management is obligated to seek the consultation of the general public (including the policyholders in this case) on how to run a company or a business. Regarding the change in bonus structure, this, I feel, is fair to be unilateral. After all, the management works based on corporate financial information that is not privy (or required for disclosure) to the general public outside the organisation or for that matter, even to the general staff (or ex-staff). If even the information is disclosed, will the layman even understand the intricacy of the issues? Some people says one can take 20-30 years of hard work to be an actuary.

    He says: While the actual bonuses were not guaranteed, we expect that NTUC Income would honour the underlying promise to distribute the bonuses in the manner that was illustrated.
    How I see it: I think that the underlying promise is about delivering the yield at maturity or upon claim. There should only be a case to fight for if the policy is surrendered or matured at unreasonably low yields with no proper explanation. Currently, we have not even reached the finishing line.

    He says: We prefer to stay with the old bonus structure, as it is more transparent…
    How I see it: In what way is the old bonus structure more transparent? Isn’t the new Income management being transparent by explaining to us on the re-shaping of the bonus?

    He says: We do not like the new bonus structure as it can be subject to arbitrary adjustment …
    How I see it: By saying that the new bonus structure can be subjected to “arbitrary adjustment”, he seems to question on the competency of the new actuary. Oh I heard from my friend doing Actuarial Science, it’s common to have 2 actuaries with differing views on the same subject matter.

    He says: We believe that this unilateral change by NTUC Income is to the detriment of the policyholders. It contravenes the “reasonable expectation” of the policyholders.
    How I see it: What is the basis of this belief? Is this based on emotions, your own views or someone else’s views? An appeal to other petitioners out there, pls be clear on what you believe and the reasons for adopting that belief system. The words in “” are quite vague. Do we understand the meaning of “reasonable expectation”? Is there a glossory or terms of reference attached with the petition?

    He says: In some past years, we received a bonus cut when the investment yield was low. As NTUC Income had a good investment yield in 2007, we ask that the shortfall in the bonus for the poor years be restored as early as possible, subject to financial solvency… We do not accept a cut in the annual bonus when the investment results justify an increase.
    How I see it: It is as good as saying, oh sorry I knew that I have dented a hole in your bonus in the past. Now it’s time for someone else to mend the dent for me, let’s make sure he does that! There again, will a good year of investment necessarily translate to higher bonuses? How about past losses (or bleedings) if there are? The investment climate and competitive landscape is also changing, it has always been. 5-10 years ago Singapore is not the same as the present, nor will the present environment persists into the future. Will the current resources help us weather the future uncertainities?

  78. Sammy said

    Well, all this lengthy debate, seriously we can argue until the cows go home.

    My suggestion to all the fellow policyholders (unionists or not): Get down to the AGM on 30 May and check it out for yourself. Do not be swayed by either Tan. Make your own judgement.

    What’s the point of protesting? Does it really going to take us anywhere? How about just coming to an understanding of the rationale behind? That’s my appeal to all who read this 🙂

  79. fern said

    well said sammy!
    that’s wat im gonna do, rather than debating here. i cant wait to hear what income management has to say

  80. Sammy said

    Thanks Fern 🙂

    See you there, I’m sure it’s gonna be very exciting.

    Many years as a policyholder. First timer in AGM :p

  81. Anwar said

    I am wondering if all these is necessary.

    Insurer has informed MAS of the change, and if the regulator is against it, it would have been shot down.

    When is Tan Kin Lian so bitter to carry out a class action?

    Has he picked up the phone to talk to the Chairman or the current CEO before he gone this step?

    I hope this will not incite trouble during the AGM or it will be very shameful that a past CEO is inciting class action to hit at the new management?

    Can’t Tan Kin Lian talk to Lim Swee Say or NTUC about this issue as well?

    I find such class action before proper consultation quite strange.

  82. Judy said

    I own 3 Living policies from NTUC Income. I have received the bonus letters, read their FAQ online, went to Mr Tan Kin Lian’s blog and the long thread of postings here after this came out in the newspaper.

    I am concerned on this protest. Are we in a position with better knowledge and collective wisdom to challenge the new management? I don’t feel good about the whole matter. A lot of the postings are attacks at the organisation, from everything and anything.

    I will not join in this protest because I find that it is not sound to simply trust one person solely by virtue of his position as ex-CEO. I told some of my concerned friends to go down instead to the AGM, pose your questions, hear both sides of the story, make an informed decision, instead of hastily jumping onto the bandwagon based on what has been said here and elsewhere.

  83. New world said

    I had bought 2 life policies from Prudential in 1986, and I now recall that in the mid or late 90’s, I believe they had the excercise in reducing the bonus due to poor returns by the same CEO.
    I believe no one protested as most people dont understand the ramification of such an action, me included. ( I took the policy loans after loosing my job in abt. 1999, and gave up the policies in abt 2001, all in I only collected back abt 70 percent of the premiums I paid for abt. 14 years, I have sworn off Life policies, I have term, now)

  84. Daniel said

    It is strange in this post that people feels that Tan has a agenda. Now, putting Tan aside. Why if people want to stick to the old plan and prefer the old plan as somebody in this post has commented. Do they have the choice of sticking to old plan ? People stick to old plan because they no longer believe that future change to policy benefits them and not confident about future, they just want annual payback. They want to make the decision themselves not been coerce by the NTUC and force pills down their throat.

    Now, million dollars question is can they choose retain the old policy. Never mind they lose out or what, can they do that or not ? Period.

  85. New Globe said

    In those years that New World is talking about, most of the insurance companies were cutting bonus (only 1 co. did not cut bonus). Even NTUC Income led by the ex-CEO had no choice but to cut it. I was also affected cause I own Income policies.

  86. ZhuGeLiang said

    This reply goes to Daniel,

    For those policyholders who bought the plans in the past, the quotations were made on the basis on both annual and terminal bonuses that are non-guaranteed. This means that all bonuses are in the non-guaranteed portion of the cash value. In case anyone think I am wrong, ask any friend of yours who is an actuary.

    Current policyholders have no case, since this is part of the current bonus philosophy. However, if it was written in the original quotation and policy contract that “it is guaranteed that annual bonuses are a minimum of X% and will never drop below that”, then current policyholders have a case. Surely writing a paragraph of the minimum bonuses that could be declared is fair?

    In my opinion, the original design of the insurance was flawed and gave no concrete guarantee to consumers. This has resulted in the current finger pointing, which has no basis. Some lessons that we can learn here.

  87. Daniel said

    ZhuGeLiang,
    thank for the answer,
    look like there’s more than meet the eyes in the case of insurance policy, and thing isn’t simple as it seems.

  88. Bruce said

    I am a policy holder, bought a few policies for my family a few years ago. As a layman, I think it is Income’s responsibility to explain the matter to affected policy holders in a way with no uncertainty term so that we are fully aware of the ‘what-if’.

    So please tell me if my understanding is correct.

    When my policy mature during the bad time, does it mean I will be getting less with the new bonus structure as the special bonus declared is highly likely to be lower than anticipated?

  89. Anwar said

    Will be interesting to attend NTUC Income AGM on 30 May.

    I am going, at least I will get to know two sides of the story of a former CEO and the current CEO.

    But I am going to seat near the exit just in case.

  90. ZhuGeLiang said

    This reply goes to Bruce:

    I think it is best you go to the AGM to ask this question. You have the benefit of asking Mr Tan Kin Lian, who designed the plan you have, and the current management.

    One party designed your plan and the other is managing your plan.

    All the best!

  91. priyadi said

    having studied this, from consumer perspective, the mandatory switch to the new plan is totally uncalled for, including to those who think the new plan is a better deal. those who wish to get higher return on maturity at the expense of annual bonus can easily reinvest about 45% of their annual bonus proceeds in an equity fund. the end result should be about the same as (or even better than) the new plan.

    and what’s more? it is also less risky because under the new plan, getting the desired result is highly dependent on Income’s internal affairs and generosity in the future. if the consumers bear the risk of their investments, it is better to invest in ILPs or unit trusts because it is much more transparent and the fund performance is not subject to insurance companies’ internal matters. if your fund manager spends $2000 on a chair, it will not affect (too much) the return of your investments.

    i wish mr. tan and other policyholders luck on their efforts on reversing the decision.

  92. PolicyHolder said

    I refer to the posting by SAM at 3.26 pm. I doubt whether an outsider or layman will bother to have a point by point rebuttal of Mr. Tan KL points during office hours. But suffice for me to say that all these hoo-hahs did not begin with the bonus cut, nor will it end with the bonus cut. NTUC Income with its new management have been behaving rather arrogantly by not engaging its policyholders in a sincere and helpful way. Its new CEO is famous for not acknowledging policyholders emails and phone calls. By alienating its policyholders, many of whom paid thousands of dollars in premiums on a regular basis, is tantamount to saying, “we welcome your money, and you better pay on time, but when it comes to service you can take the merry-go-round, and oh, don’t call us, we’ll call you, if you are late in your premiums, we will definitely call you”.

    Now one year into the new approach, we begin to see some of the perks associated with Income quietly disappearing. Things like fitness centres and other “non-core” business to Income but which is becoming dear to our hearts are heartlessly taken away quietly. It does not take long then for the average policyholder to see red especially when the annual bonus is cut and then tell us that it will be compensated with a special bonus in 20 years time. Our questions when we go to your centres are also not answered as the frontline people there told us that they are unable to answer and there is more Tai-chi to ask management. But management does not reply. From my observations, I can see that the staff present are in a way silently protesting the changes too.

    Finally I received my statement yesterday and after reading it, I find the statement about getting the same or slightly more in special bonus unbelievable. No one can forecast that an investment can definitely make the same or slightly more. I get the impression the new management is not as trustworthy as the old. Their styles are also very different. The original management is thrifty and spends its money very cautiously, ensuring value for money and go for substance rather than style. I feel comfortable with this style as I am assured that the hard earned money will be returned back to policyholders where it matters most.

    Now with the new management, one can see that they are spending policyholders funds like water. I have heard from people working inside Income that they spend it on holding meetings in fanciful hotels like the Ritz Carlton, going for management retreats in exotic places, renovating CEO room to a very high standard and the latest postings say that $2,000 chairs were bought. These are the signs of extravagance, and is not congruent with the philosophies of a co-operative. This also smacks of materialism. If it is used with the CEO’s own money we cannot comment. But comment we must if it is used with money that otherwise would go back into the policyholders fund for distribution into our bonuses. And he has the cheek to cut our bonuses to fund his extravagance!

    My family and I are therefore glad that no less than an ex-CEO of NTUC Income is championing our rights. As he is also a qualified actuary, he will not be intimidated by the complex figures used. He is therefore the best person to lead the charge. I also believe Mr. Tan KL is an honourable and honest man, having observed him for the past twenty years, both as a policyholder and as a staff.

  93. TheQuant said

    Thank you Policyholder; you have made some valid points. But I am not sure if your statements are backed by concrete facts. Some sounds like rumours, which may or may not be true.

    I would like to propose the new management to show us the following audited figures compared across this year and the past few years during the AGM so that we have a better picture what is happening. Numbers do not lie. Only then can policyholders like us have a factual understanding.

    1. Management Expense Ratio
    2. Compensation of CEO and key management
    3. Par Fund Expense Ratio
    4. Ammortized expenses spent on maintenance of building
    5. Training cost per employee
    6. Profit/Loss of non-core businesses

    After reading the posts, I am really confused who is telling the truth. I mean all those talk about Mr Tan having vested interest and the new management spending money like nobody’s business. Who knows who is telling the truth? It is better to know the numbers and hence the truth.

    Before that, let’s stay cool and await that AGM. I will be attending (hopefully no OT), and will probably write a summary back here again.

  94. Anwar said

    For those who are still clamouring for the fitness centre, should find out alternative as the Sports Council fee for the fitness center is very low, especialy for the off peak package.

    Go to the gym at any of the sports complex and find out, and you will be surprised. No wonder the Income Fitness Centre has to go.

  95. sb said

    I don’t understand why Mr Tan Kin Lian chooses to tear apart the organisation he built over the past 30 year.

    It is very sad to see the damage and pain this episode has caused

  96. Passerby A said

    Since there was some talk about staff turnover..I guess maybe I can revoke some of the past memories here..During Mr Tan Kin Lian’s time, there were a few high profile senior management turnover as well. Off hand, I can recall Peter Monksfield and Mr Stanley Jeremiah leaving their job after just a few months. While this is not aim particularly at anyone, my point is that staff turnover happen on a regular basis. It does not be that negative after all.

    While I cannot personally vouch for their capabilities, the fact is that they are still doing well after they leave Income mean that they are not the non performers.

    While I cannot dispute the fact Mr Tan Kin Lian’s comment on the profitability of the non core business (as I do not have access to the actual numbers), I wanted to point this up. Mr Tan Kin Lian has 30 years of running the business while the present CEO has been at it for 1 year plus. If we really want to make a comparison, it would be fair if more time is given to the present management. During Mr Tan Kin Lian’s 30 years as CEO, i am sure he did make some bad decisions also. He did what he thought was right at that time. But time prove that his actions were wrong after all. With the same grace extended to Mr Tan Kin Lian, I think it will be fair if we just wait and see what happen instead of just rushing in to make a judgement.

    Lastly, I think there should not be any personal attack to both Mr Tan. We are in a civilised society so lets have a gentleman discussion rather than insulting a person’s character. Lets deal only with the facts (those that can be backed with evidence) and not base on what your friends or friend’s friend told you

  97. Bruce said

    Does Income has any subprime related investment? Perhaps this question should be asked during the AGM.

  98. SharingViews said

    Sincerely hope that the whole saga will be a good learning experience for the new management to make them manage the organisation better and not to forget the social purpose that NTUC Income is to serve. If NTUC Income is going to be like any commercial organisation, then the existence of NTUC Income needs to be questioned. My understanding is that the cooperative was not set up to compete with the commercial insurance companies but to help Singaporeans to have the necessary insurance protections when they needed one and to be of good value too. If the commercial insurance companies can provide better value and service then is there a need for NTUC Income’s existence?

    Also if the new management is really sincere about having a customer centric organisation, then maybe it is better that they start talking to the customer first and find out what they really need before spending any money based on certain people’s perceptions. So far I have not been asked as a policyholder as to what our needs are and what we like to have in the future etc.. Maybe like what Sam has posted (no. 77) “I do not think that any management is obligated to seek the consultation of the general public (including the policyholders in this case) on how to run a company or a business. Regarding the change in bonus structure, this, I feel, is fair to be unilateral.” However, I always thought that it is important to listen to customers…

    Clarifications to posting no. 31 on staff bonus, the fact is that all the Income staff used to get 2.75 months when the cooperative has done well (the 0.75 month are deferred incentives) but now most them get 2.31 months. That’s so call to be better bonus??? In addition, whether was the past and now, the top performing staff was getting extra months of bonus anyway, which was fair to reward the deserving staff.

  99. Joe said

    i received my statement, i expected better quality communication, but was disappointed.

    i think the new management can do better, given the number of high quality senior management talents that have joined.

    there are 2 charts in the statement, showing the total bonus using the old and new structure. Both charts reflects the same total bonus, but varying portion of annual and terminal bonus.

    if you ask me to choose as a policyholder and investor, its a no brainer to choose the old bonus structure because it shows higher portion of total bonus is in annual bonus, which is vested early. The total return is less dependant on very high but uncertain terminal bonus.

  100. Anwar said

    One can see that when this topic is placed on a neutral site, there will be diverse and balanced views, unlike when it is in Tan Kin Lian’s blog, as he blocks those contributions that are not considered positive to him, as an administrator.

    So it makes him looked very good, but since this topic surface here, it is more balanced and one can see better.

    I hope this coming AGM, will give us policyholders peace of mind, as we have to move forward and we cannot turn the clock back.

    In the new economy, old froggy has to retire gracefully and let the new generation take over.

    Will the new team bring NTUC Income forward to the next level to be a stronger co-operative, it is yet to be seen, but they have to be given time to do the job, and not one year into the job, the former CEO starts to stir it and impose his old belief, actuarial practice of 30 years history, rather the new team is bringing the company to face the new challenge of the new economy.

    Singapore and globally, it was high growth period past 30 years, but it is a more challenging and matured global economy which old froggy has to admit, we have to leave it to the next generation who are more capable in the new order of things.

    Hopefully this new team fits the bill or I have to suffer in my retirement paying the bills.

  101. ZhuGeLiang said

    This reply goes to Bruce (#97)

    A good point raised. I just read Google News and found AIG lost USD$7,800,000,000 in the latest subprime writedown. This is very worrying. Looks like the subprime woes are not over yet.

    http://www.guardian.co.uk/business/feedarticle/7506648

  102. […] Strap on for life – Darth Grievous’ Dark Domain: To laugh or to cry? (I) – The Online Citizen: Former CEO of NTUC Income calls for “collective protest” – Diary of A Singaporean Mind: MM Lee Speaks – Ultimate Wisdom on Protests – Endoh’s Dungeon: […]

  103. Annoymous said

    I am working in the investment department of NTUC Income.

    Our exposure to the subprime investment is quite high. This was after the new management took over last year in February and there was a change of investment objectives as compared to the previous management. The new management wants to invest in higher yielding investments.

    I was not suppose to say anything on this. But i feel very upset to do things against my conscious of hiding the figures.

    I just hope someone can investigate and all these be made know to the general public.

    AIG is a listed company. They are required to make provision for the subprime losses. Whereas NTUC Income is not.

  104. New world said

    #102, Oh Dear!

    Yes, we have to be informed what is our exposure to sub-prime, and #102 can you clarify,
    was this investment before or after the new managgement?

  105. ThinkHard said

    This reply goes to #102,

    This really shows how information can be distorted. If you were really an investment guru, surely you would have understood the risk-based capital (RBC) framework in governing insurers and the basic concept of asset-liability matching? Really a slap on the face for MAS, which is extremely strict with all our banks and insurers.

    Anyway, the below is from a reputed independent financial advisor’s (Mr Pat Lim) blog.

    The TRUTH is these investments were made in 2004 and 2005, during Mr Tan Kin Lian’s time. Maybe Mr Tan Kin Lian should come to this thread to explain.

    ———————-
    As at 30 June 2007, NTUC Income holds investments in collateralized debt obligations (CDOs), including collateralized loans obligations (CLOs), amounting to S$390 million. This represents about 1.8% of our total assets.

    These investments were made in 2004 and 2005 as part of our strategy to diversify our investment portfolio by investing in alternative asset classes. The investments were made
    out of surplus assets from allocations intended for equity investment.

    There are no investment in CDO-related products under NTUC Income’s suite of investment-linked funds where the risks are fully borne by policyholders.

    Of the total CDO portfolio, 48% or S$188 million are in asset backed securities (ABS) CDOs. The ABS CDOs have a diversified portfolio of underlying high grade and mezzanine ABS assets. The rating profile of the ABS CDOs comprise 85% in A and 15% in BBB.

    To date, none of the CDO investments of NTUC Income has been downgraded by the credit rating agencies.

    We will continue to monitor the portfolio closely and intend to hold the CDO position as part of a long term diversified portfolio.

    http://patlim.blogspot.com/2007/12/dr-moneys-article-in-new-paper-insurers.html

  106. joe said

    If what #102 said is true, hope that it has nothing to do with the bonus restructuring.

    But generally speaking, my understanding is that for the subprime assets they invest (aka CDO), if they hold to maturity, they should be able to get back cost plus interest, assuming no defaults along the way. Hence the actual impact might not be as severe.

    However being transparent and inform the policyholders the actual exposure, what is expected impact on the par fund etc etc should be good practice.

  107. Fox_mulder_2 said

    Seriously, i think the truth of the matter lies somewhere in between and is out there.

    And, one should take the time to try to ascertain the truth than trust what is going on.

    If you bother to run thru MAS website – you will find that there is nothing stated about “reasonable expectations” of policyholders – the term “reasonable expectations is coined by Tan Kin Lian – at least i didnt.

    If Tan Kin Lian or anyone else out there can point this out to me, i would be most grateful.

    If there is no legal or contractual right, what are we policyholders actually objecting to ? Is this merely another form of a “entitlement mentality” ?

    QUOTE
    Wednesday, May 07, 2008
    Reasonable Expectation
    Mr. Tan,
    What do you mean by policyholder’s “reasonable expectation”?

    REPLY
    In a participating life insurance policy, the contract states that a bonus will be added each year based on the profit for the year and distributed in a manner that is approved by the board of directors, acting on the advice of the actuary.

    To prevent abuses, the Monetary Authority of Singapore (MAS) has issued guidelines to require the insurance company to declare its bonuses fairly and equitably, to meet the “reasonable expectation” of the policyholder.

    Take the example of a policy with a benefit illustration stating that a bonus of $X will be added yearly to the policy, subject to the investment yield at 5.25%.

    If the insurance company earns much more than 5.25%, the policyholders would expect the bonuses to be increased. It would not be fair for the directors to reduce the bonus. The policyholder can object to this reduction as a breach of “reasonable expectation”.

    If the yield is lower, the policyholder will have to accept that the bonus will be reduced, but they can insist that the reduction has to be applied fairly across all the policies. The insurance company cannot cut the bonus for some policies and increase the bonus for other policies.

    UNQUOTE

  108. Annoymous said

    I have strong evidence that NTUC Income is going to increase the premiums for their Incomeshield and Motor Insurance again.

    Do look out for it in the next few months. Some of you might be bemused that they are on one hand cutting the bonus, on the other hand increasing the premiums for other products.

    Do also be awared that the every 5 yearly anniversary bonus given to all policyholders will also be stopped with immediate effect.

    Don’t ask me the reason. Better ask the management. All along every 5 years we are entitled to the special anniversary bonus, now change management, we don’t get it anymore.

  109. PolicyHolder said

    Newworld @ 104,

    If you read anon @ 103 posting carefully, you will see that he meant the new investments were done during after the change in management. He or she went on to say that he or she is very upset to do things against his conscience, presumably having to hide the figures and/or do high risk investments.

    Annoymous Says:
    May 10, 2008 at 1:59 pm
    I am working in the investment department of NTUC Income.

    Our exposure to the subprime investment is quite high. This was after the new management took over last year in February and there was a change of investment objectives as compared to the previous management. The new management wants to invest in higher yielding investments.

    I was not suppose to say anything on this. But i feel very upset to do things against my conscious of hiding the figures.

    I just hope someone can investigate and all these be made know to the general public.

    AIG is a listed company. They are required to make provision for the subprime losses. Whereas NTUC Income is not.

  110. Anonymous 103 had posted the same comment in my blog. I had rejected this comment because I suspect that this person is trying to spread rumours about the company under the name of anonymous. Motive of this person is unknown.

    Hope TOC moderator will be careful when publishing such comments

  111. Passerby A said

    This is to the comments made by with regards to the increase in Motor and Incomeshield premiums.

    Perhaps that you do indeed have evidence that they are going to raise the premium but I am sure you do have similar information about how the industry is making a loss in motor insurance. Its a industry wide problem. Motor claims has been going up.

    Similarly for Incomeshield, inflation has been going up and healthcare costs have been on the rise too.

    While I do not claim to be an expert, but motor and health insurance seem to be a form of risk sharing (rather than risk transfering). You have a group of people coming together to share the risk. If the cost of goes up, each member in the group have to contribute more to the fund. This is unlike a state welfare where you just pay a minimum and enjoy unlimited care (whether cost goes up anot, you still pay the same)

    While everyone will love the premium to be the same (or even lower), sometimes it is not realistic. If Income try to keep premium constant while the cost keep goin up, it will go kaput soon. In a way, it is worse off for anyone.

    Btw, i not sure how the premium increase is linked to the bonus cut after all, you are talking about general insurance and life insurance. If i not wrong, they are run as different business so based on this logic, they are not related. It is just like saying that NTUC Fairprice increase their prices because NTUC Income spend $2k each for their chair

  112. Anwar said

    I received a note from my agent that tells me this.

    “The description of a 45% cut is sensational and alarmist. Let me explain why I say this.

    In April this year, we re-structured the bonus with respect to life policies incepted after 1993. We decreased our annual bonus (or reversionary bonus) from 2.3% to 1.3% of the sum assured. This is a 1% reduction which is being deliberately interpreted as a 45% cut by our critics.

    Let me illustrate with examples. Bank can choose to say that it is slashing mortgage rates by 25% when it reduces mortgage rates from 4% to 3%.

    Or if we increase our yield from 2% to 3%, we can sensationalise it by saying that we increased yields by 50%.

    I look at this therefore as a 1% reduction of the annual bonus which is compensated by the special bonus to achieve the same yield. Policyholder yields are not negatively impacted by the re-structure.”

  113. Peace said

    #112 Anwar

    If policyholder yields are not improved by the re-structure, then why bother to do so. I would rather have my annual bonus maintained in the manner as illustrated rather than agreeing with the special bonus which is highly uncertain. This is what I felt after reading all the different views of the forumers here.

  114. Zhummmeng said

    Anwar of 112, it depends who is looking at it. If it is NTUC it prefers to downplay the impact.Try compound this 1% cut for 20 years and you will see the whopping difference.You can understand why NTUC prefers their interpretation. Of course it is alarming to NTUC if policyholders know how impactful this 1% cut. Let me tell you if NTUC is sincere and truthful the 45% gives the true and accurate picture of the cut.
    As for the restructuring policyholders are actually worse off. Look at the charts,if you have received the letter,. They show the old and the new. The old has more annual bonus and it is received earlier and the special is lesser and at the later time.Have you heard about this expression, “a bird in hand is worth many in the bush” You prefer to see the money earlier. right? Those you have not received may not arrive. Of course the new chart shows you less now and more in the future but how much more than the old structure. We are told the new EQUALS the old, no impact.Why the hell change it? Not true!!!! If you apply time value of money you would see the impact. Money received today is worth more than money received tomorrow. On top of this, risk has gone up. It is not guaranteed. In other words you may not get it.
    So , policyholders, don’t be fooled. The management is pulling a wool over your eyes to prevent you too see the truth. Some of you may think that because you are holding your policies for long term therefore there is no difference. If there is no difference why change it in the first place. They tell you for greater exposure to equities for higher return. They never mentioned higher risk.
    When it happens I wonder what would their reason this time. Maybe
    like this. “I already told,hor, no quarantee. why like this ,eh?
    Attend the AGM and grill them over this

  115. Bruce said

    Whether 1% or 45% is not the issue. I think what is important is the ‘real’ reason for making the change. As of now, there are too many questions unanswered, and as a loyal customer, our concern should be addressed adequately. If mistakes have been done by the management (whether old or new), the burden shouldn’t be passed on to the customers.

    It’s not an issue about Mr Tan vs Income here, but a larger issue on customer rights. For my insurance saving plan, I am looking at consistent return and protection with minimum risk. If I wish to seek higher return with higher risk, I rather go with Mark Mobius or someone in Schroder instead of any insurance company.

    Subprime problem is far from over, but how it is going to be unfolded, those expert will deal with it. For me, I just hope the Education plan I bought from Income still gives me the similar projection in years to come. It might be peanuts to some with that 1% change, but certainly a big deal for me if that affects my son’s education.

  116. Anwar said

    Anwar is vindicated.

  117. Raymond said

    I think NTUC Income should give policy holders the option to opt out of this harebrained “deferred bonus” scheme. I do not support it one teeny weeny bit at all.

  118. The Philosophical Economist said

    First there was the Undercover Economist and now there is the Philosophical Economist.

    In Philosophy, we learn about the Cause and Effect theory. This mean that for every Effect, there must be a Cause. E.g. If the leaves are moving (Effect), it must be because the wind is blowing (Cause). However some Cause and Effect relationships are not so straight. Long long time ago, the people believe that the sun rise because the rooster is crowing. Although we may laugh at this now but we must remember that science is not very well developed then. The people saw that after the rooster crow, the sun will rise. This happen day after day so it is natural that people assume the sun rise (Effect) is caused by the rooster’s crowing (Cause). In this case, it is natural to assume that the bonus ‘cut’ (rather than ‘change’) is caused by the big salary, high bonus, luxurious renovations and what have you. This is becase it is what come to mind most readily. Sometimes what we assume might not be the truth so I think instead of relying on our assumptions, we need to find the truth. Guess the truth can only be known during AGM.

    Now moving on to Economics, our lesson today is on Economies of Scale. The Economies of Scale states that the higher the number of policyholders, the lower will be the average cost of servicing each policyholder. This is because the fixed cost (IT system etc) can be divded among more policyholders. Lets say that Income has 1000 policyholders who prefer to stay on the old scheme. There is then a need to maintain a separate system for these 1000 policyholders. The average cost per these policyholders will be higher because it is not realistic to just keep a separate system for the 1000 policyholders. Also, we cannot be certain that these 1000 policyholders will be better off in the long term. After all, the chances of them being worse off is never more than 50%

  119. powerhouse said

    Dont think NTUC Income dare to have the opt out option. Otherwise every policy holders will opt out for sure.
    Defeat its purpose of holding the money for investment for so called long term…

  120. Bruce said

    I suppose we will be shown what they want us to see during the AGM, and in the end, we will still not know the real cause for the bonus change. They will try to convince us that the Sun rise after the rooster crow with all sorts of theory and charts.

    Even the expert can’t understand the subprime problem, how can humble people like us understand the art and science of insurance business.

    In the end, it all boils down to trust, not because of philosophy or economy 🙂

  121. Anwar said

    Tan Kin Lian has always mentioned “Risk is to your advantage”.

    In his talks, he always shared that equities in long term will give better yield than bond.

    Even if market turns bad, wait 3 to 5 years, it should turn around, “risk is to your advantage”, this was what he spoke on several times in his investment talk held in Income when he was CEO.

    So isn’t it in the correct direction is the new management decide to heed this wisdom to be more flexible in investing the life fund for better yield long term, than be tied to bonds for the guarantee or the vested annual bonus?

    Restructuring the bonus to offer flexibility to invest for better yield, shouldn’t this be correct as “risk is to your advantage”?

  122. zhummmeng said

    It is true over the longer term equities give better return.But you must remember the policyholders are investors with different risk return profile and most of them are risk averse.
    Ntuc is telling them that the new bonus structure can give better return but no better than the old structure. Did ntuc mention about the increased risk? What is this? Putting policyholders’ money to higher risk and yet getting the same return. Mr. Anwar, you have misplaced your sense of humour. I know you are trying very hard to defend ntuc but instead you are embarrassing ntuc for your “holds no water” reasoning and you are quoting Mr.Tan out of context.
    The reason ntuc gives about reduced annual bonus is to free up the money to give “flexibility” to the life fund ,which I interpret as giving them more speculative opportunities to play with the portfolio. After all, ntuc has a long time horizon before it needs to pay the special bonus, right? So how or what do they do with this one size fits all portfolio? How do they pay the policies that mature at different time?
    Remember that the special bonus is NOT guaranteed.It means that it may not be paid also unless it is using MLM tactics of payout.

  123. Fox_mulder_2 said

    I believe there are intelligent aliens and intelligent life out there. : )

    But I am soooo disappointed that no one has clarified this “reasonable expectation”.

    I had a reasonable expectation that some out there knows the real answer aka the truth.

    Since Zhummmeng appears to be a prolific intelligent contributor, could he clarify his comments and pardon my ignorance:
    #122 “But you must remember the policyholders are investors with different risk return profile and most of them are risk averse.:

    When i bought my life participating policy with Company P (not NTUC )I am shown a bonus projection of guaranteed and non-guaranteed returns.
    Insurance is bought for the life cover and the so called saving element and not for risk associated with ILPs or Unit trusts.

    I am not informed what sort of investments or funds my premiums are invested in. So i am not sure of the basis of mentioning risk. Thanks

  124. PolicyHolder said

    Fox Mulder says: When i bought my life participating policy with Company P (not NTUC )I am shown a bonus projection of guaranteed and non-guaranteed returns.
    Insurance is bought for the life cover and the so called saving element and not for risk associated with ILPs or Unit trusts.

    Precisely, since most of us bought insurance for life cover and savings, NTUC Income should not unilaterally cut our annual bonus to use our money to speculate in high risk instruments since it is not congruent with our basic aims of life insurance cover and savings.

  125. Wendy said

    I am a late comer to this blog and noticed that there is so much excitement regarding the impending protest and there is insinuation that the adjustment in bonus arose from improper spending. The argument for it does not sound convincing. One can choose to be wasteful without resorting to bonus adjustment.

    I am a bit intrigue about so called “non core” business. Based on my understanding of insurance business, investment in office buildings is not uncommon for local insurance companies. Not sure why it is considered “non core” business.

    To use (potential/actual)profit from investment in building to subsidise losses in other non core ventures sounds rather strange. Coming from a commercial perspective, I feel it is more prudent to evaluate each venture on a standalone basis. Thus I would support the move by the new team if it dissolved the not so profitable ventures.

    Back to bonus restructuring. If the effect results in “relatively” more money flowing out of life fund to shareholders’ fund, then there is ground for protest. We will not be able to see it until it happens. This we will have to rely on MAS to monitor.

    Guess the outcome of the protest is to let Income’s management know that some policyholders are not happy, and for them to provide clarification/ explanation.

  126. The Philosophical Economist said

    Hi Bruce

    You are right. It is still about Trust ultimately. Trust is very important in any situations.

    The management can show you what they want you to see but the management cannot show you what you hope to see if that thing does not exist. The management can be showing the truth but yet the management cannot force you to accept it as the truth.

    I cant think of a better phrase right now so without sounding demeaning to anyone “You can bring the cow to the water but you cant force the cow to drink the water”

    Note: If you feel that the above phrase sound offensive, please kindly ignore it.

  127. Wendy said

    Dear Fox_mulder_2

    Suggest you speak with a qualified financial adviser regarding the insurance you have purchased. I am concern you might be getting inappropriate advice/opinion from anonymous people in this blog.

    Some of the comments made are highly skewd.

  128. Bruce said

    Hi Philosophical Economist,

    The cow, before coming to this farm, is promised that he will have drinking water from this pond. Then one day, the farmer told the cow the pond has to be closed, and he has to drink from the other pond in future. The farmer assured the cow that the water gives the same benefit even though it has a different taste, and that the change is inline with industry best practice, gives them more flexibility in managing the farm. But whether you like it or not, you still have to drink from the new pond. Cow, being a cow and simple minded, thinks, if it is still the same, why should I take the risk and drink from this new pond? And in future, will they also force me to drink from a different pond?

    Of course in 10-20 years time, the cow will only know the effect of the new water, while the farmer, who might truly believe what he claimed, are likely to have retired and riding horses somewhere 🙂

    Dear Wendy,

    Perhaps you should say qualified Independent Financial Advisor to be more appropriate. Being anonymous doesn’t mean they have something to hide, and being Wendy or Bruce, doesn’t mean we have no hidden agenda.

  129. zhummmeng said

    Fox_Mulder,
    A participating policy has an expense and and a saving account.
    The expense component pays for your protection or better known as mortality charge and the amount taken from your premium depends on the sum assured , age and so on.Whatever left is saved and invested and it decreases over time.
    There is a guaranteed component which invests in bonds and a non guaranteed which invests in equities , properties and other risky assets. This non guaranteed component determines the annual bonus and the special bonus and eventually drives the total return of your policy. Theoretically , the non guaranteed part can be zero.
    However, an annual bonus is declared yearly and is vested and the company is liable to pay you.
    Your money and the rest of the policyholders’ money are pooled into the same life fund and invested into a portfolio which does not take into account individual policyholder’s risk appetite, time horizon and goals. There is only one portfolio to fit everyone’s circumstances.
    You and everyone are disadvantaged because of this. You have no control over the assets. It is left to the company and they can ‘suka suka’ do whatever they like to do. Example like what is going on in NTUC,a cooperative which never had to reduce annual bonus for the last 30 years found necessary to change the structure now. Excuse is flexibility and for your good.
    Your investment into this ‘collective investment” is at the mercy of the company. To compound your problem the insurance agents either they are clueless or lazy to tell you all the truths and nothing but the truths but they always tell you half truths and half lies.
    Heed Wendy’s advice to get a qualified and competent but HONEST adviser.

  130. Fox_mulder_2 said

    Thanks Zhummmeng

    You pointed out:

    “Your money and the rest of the policyholders’ money are pooled into the same life fund and invested into a portfolio which does not take into account individual policyholder’s risk appetite, time horizon and goals. There is only one portfolio to fit everyone’s circumstances.”

    But this appears contradictory to your comments at #122 “But you must remember the policyholders are investors with different risk return profile and most of them are risk averse.

    Firstly, why would policyholders with a participating life policy (exclduing ILP) be considered as investors (investors in the real sense of the word) since they only look at the bottom line of their returns at maturity, death or when a claim is made ?

    Secondly, from the time i am about to buy the policy, I am already aware that I have no control of the assets !

    Thirdly, I am sure insurance contracts have terms and conditions to protect the insurance companies from such challenges from a policyholder. Which goes back to my ORIGINAL question – how does one argue this concept of “reasonable expectations”. Perhaps, Tan Kin Lian with his knowledge and eloquence should take NTUC to FIDREC to test his case – beats wasting time & money on a lengthy, costly lawsuit (aka Raffles Town Club)

    Lastly, anyone knows where can you find a qualifed, competent but Honest adviser (even if we are at the mercy of the insurance company) ?

  131. Anwar said

    Whether you are a Cow Peh, or Cow Bu, it is still a cow.

    The Farmer will die one day, the farm may not last forever, the farmer need a succession plan or let the cows die of natural death and the farm close shop.

    When the Farmer gets older and with the dawning of new technology, does the cow still have to drink from the pound?

    The cows are now being massaged to provide better beef, no more roaming around in the field.

    As we move along, or rather the cow moves along, new technology and methods will be developed to make it more productive.

  132. hi there this is a very up to date and informative can i put a link on one of my blogs -regards Angela

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