This portal contains a selection of articles from blogs, local media, international media and party websites, touching on issues affecting the lives of Singaporeans. They are relevant for Singaporeans to make the right decision in voting at the next general election. Visit SGEP daily (it takes only 10 minutes daily) to get the gist of these issues and a wider coverage (apart from the local newspapers).
SGEP
Friday, December 3, 2010
CPF Life Annuity - good or bad?
Many people ask me for guidance on whether they should take up the CPF Life Annuity. How does it compare with the Retirement Account and a life annuity from an insurance company?
Here are the key facts:
1. The CPF Life pays the annuity for life and gives a small bequest to the beneficiary on death prior during the initial period (which varies according to the annuity option. The Retirement Account pays a higher payment and runs out after 20 years. The balance of the account is payable to the beneficiary on death during the 20 years.
2. The difference between CPF Life and Retirement Account depends on how long you live. As you do not know, there is no point in trying to do the calculation of "which is better". The actuary for CPF will do the calculation based on the average lifespan. You cannot be smarter than the actuary.
3. As the actuarial calculation is based on the average life expectancy of people in good health, you should avoid the CPF Life annuity if you know that you are in poor health.
4. There is a bonus payable to most people who take up the CPF Life annuity, so if you are given a bonus, it is better to opt for the CPF Life. If you find the bonus to be too small, say less than 5% of the invested sum, it may be better for you to stay with the Retirement Account.
5. The underlying yield for CPF Life and the Retirement Account is the same, i.e. 4% per annum. This is higher than the underlying yield payable by a life annuity from an insurance company. So, it is better to keep your money with CPF, either in CPF Life or the Retirement Account.
The CPF Life is an example of many complicated schemes that have been introduced by our Government. The general public is confused. This is made worse by the nature of Singaporeans, who are generally quite naive financially, but they like to seek advice from the wrong people on "which is better". As the calculation involve many possible scenarios, it is not possible to get the "right answer".
I hope that the Government will sort out this mess and make things simpler for the citizens, rather than leave the mess to cause a lot of confusion.
Tan Kin Lian
Here are the key facts:
1. The CPF Life pays the annuity for life and gives a small bequest to the beneficiary on death prior during the initial period (which varies according to the annuity option. The Retirement Account pays a higher payment and runs out after 20 years. The balance of the account is payable to the beneficiary on death during the 20 years.
2. The difference between CPF Life and Retirement Account depends on how long you live. As you do not know, there is no point in trying to do the calculation of "which is better". The actuary for CPF will do the calculation based on the average lifespan. You cannot be smarter than the actuary.
3. As the actuarial calculation is based on the average life expectancy of people in good health, you should avoid the CPF Life annuity if you know that you are in poor health.
4. There is a bonus payable to most people who take up the CPF Life annuity, so if you are given a bonus, it is better to opt for the CPF Life. If you find the bonus to be too small, say less than 5% of the invested sum, it may be better for you to stay with the Retirement Account.
5. The underlying yield for CPF Life and the Retirement Account is the same, i.e. 4% per annum. This is higher than the underlying yield payable by a life annuity from an insurance company. So, it is better to keep your money with CPF, either in CPF Life or the Retirement Account.
The CPF Life is an example of many complicated schemes that have been introduced by our Government. The general public is confused. This is made worse by the nature of Singaporeans, who are generally quite naive financially, but they like to seek advice from the wrong people on "which is better". As the calculation involve many possible scenarios, it is not possible to get the "right answer".
I hope that the Government will sort out this mess and make things simpler for the citizens, rather than leave the mess to cause a lot of confusion.
Tan Kin Lian
Thursday, December 2, 2010
Zeitgeist movie and Tommy Wong’s book
Read about “Guru Dick” and the concept “We are all one” in Tommy Wong’s book “Wisdom on How to Live Life (Book 1)” and watch them in the movie “Zeitgeist: Addendum”.
Private shield and Liver Transplant
Insurance agents tell the consumers that the cost of a liver transplant is $100,000 and that it would be covered under a private shield plan.
Before you take the advice of the agent, you should consider the following:
a) What is the chance of needing a liver transplant?
b) Where are you going to find a liver when you need it?
c) What is the total premium that you have to pay for the private shield plan?
Some of the risks, such as the need for a liver transplant, is quite remote. You should not be spending too much money to protect against these risk. The cost of a private shield plan may take away $40,000 over a lifetime. Why pay so much (a certainty) to insure a risk ($100,000) that is quite remote?
Before you take the advice of the agent, you should consider the following:
a) What is the chance of needing a liver transplant?
b) Where are you going to find a liver when you need it?
c) What is the total premium that you have to pay for the private shield plan?
Some of the risks, such as the need for a liver transplant, is quite remote. You should not be spending too much money to protect against these risk. The cost of a private shield plan may take away $40,000 over a lifetime. Why pay so much (a certainty) to insure a risk ($100,000) that is quite remote?
Social insurance
There is a role for social insurance to deliver the basic needs for the population in an efficient way, compared to private insurance. Our government leaders should understand its strengths and weaknesses and find the right balance between social and private insurance.
There is a mistaken belief that private insurance is more efficient. It is actually more costly to use private insurance to deliver the basic needs that are required by most people.
Not insured under Medishield
Some people are worried that their parents are not insured under Medishield. They try to apply for Medishield now, but the application is rejected as their parent has some medical condition. They need not worry. Here are some tips on how to cope without insurance.
Ask Mr. Tan
Ask Mr. Tan
Do you hate Singapore - a response
Read the response by C H Yak in SGEP.
The article has many interesting photos of Nanjing, showing the remarkable progress made in the city. He compares life in Nanjing with Singapore and raises several issues that should be considered at the forthcoming general election in Singapore.
The article has many interesting photos of Nanjing, showing the remarkable progress made in the city. He compares life in Nanjing with Singapore and raises several issues that should be considered at the forthcoming general election in Singapore.
Minimum wage - a successful government policy
Many countries have implemented the minimum wage. It has been voted as the most successful government policy in the UK according to a survey by BBC. Read SGEP.
A big sacrifice - Goh Meng Seng
Goh Meng Seng has to make a big sacrifice in going into politics. He believes in giving a choice to the people of Singapore. Read SGEP.
The monk, the clown and the minister
Who are these people and how do they affect our politics? Read SGEP.
Wednesday, December 1, 2010
Potential danger of joining an insurance company
The wife of an ex-insurance agent shares the unhappy experience faced by her and her husband who quit his job to join an insurance company. She explains some of the unethical practices that the husband had to practice to meet the sales quota. She is glad that he has given up the insurance job and had returned to an ordinary job.
Ask Mr. Tan
Ask Mr. Tan
CPF Life annuity - case study
Here is a case study of a person aged 58 who has to decide on whether to stay with the Minimum Sum scheme or to convert into a CPF Life Annuity.
Ask Mr. Tan
Ask Mr. Tan
High cost of operating a business in Singapore
Sent to Forum Page, Straits Times
I recently looked at the cost of renovating a small office of 1,300 sq ft and was shocked to receive several quotations exceeding $70,000, in spite of my modest requirements. This shows how costly it is to operate a business in Singapore.
Included in the cost is a sum of $3,500 to obtain the approval of the authority for fire safety. I learned later that this is the fee payable to professionals to certify the safety of the renovation. This same fee is charged for a small premise as well as a large premise of 10,000 sq ft.
It does not make sense to impose such a costly requirement for a small premise. I suggest that renovation of small premises should be exempted from the need to get the certification of a professional. Perhaps this certification should only be required in exceptional cases where the premises have activities that could impose a danger to fire safety.
Over the years, I have heard many complaints from small enterprises about the high cost of operating a business in Singapore. Several initiatives were taken to address these complaints. I am surprised to learn now that these initiatives did not seem to address this regulation, which seemed to be unnecessarily costly.
Tan Kin Lian
I recently looked at the cost of renovating a small office of 1,300 sq ft and was shocked to receive several quotations exceeding $70,000, in spite of my modest requirements. This shows how costly it is to operate a business in Singapore.
Included in the cost is a sum of $3,500 to obtain the approval of the authority for fire safety. I learned later that this is the fee payable to professionals to certify the safety of the renovation. This same fee is charged for a small premise as well as a large premise of 10,000 sq ft.
It does not make sense to impose such a costly requirement for a small premise. I suggest that renovation of small premises should be exempted from the need to get the certification of a professional. Perhaps this certification should only be required in exceptional cases where the premises have activities that could impose a danger to fire safety.
Over the years, I have heard many complaints from small enterprises about the high cost of operating a business in Singapore. Several initiatives were taken to address these complaints. I am surprised to learn now that these initiatives did not seem to address this regulation, which seemed to be unnecessarily costly.
Tan Kin Lian
Belgian court fines Citibank over Lehman sales
http://www.google.com/hostednews/afp/article/ALeqM5guCCBwmq2OmDxE3dhQH6df5BId-w?docId=CNG.10af55f3e3cb08c769737268f0f3bdbc.931
BRUSSELS — A Belgian court fined Citibank 165,000 euros (216,000 dollars) on Wednesday after determining it used "false advertising" to sell Lehman Brothers investment products without warning clients of risks. The court found that Citibank breached laws on commercial practices, having "minimised the risks" and having "led inexperienced investors to put money into the American bank." The tribunal said Citibank did not stop selling the products even though Lehman's credit rating had been downgraded.
Citibank sold 128 million euros worth of Lehman Brothers bonds to some 4,100 clients in Belgium. These bonds became worthless after the collapse of Lehman, the trigger for the world's deepest downturn since the 1930s Depression, in September 2008.
In February, Citibank said more than 97 percent of these clients had accepted a settlement, some of whom took a 65 percent redemption on the spot rather than wait for a potentially a higher figure later. For the remaining 120 or so clients who pursued the action, the court ordered Citibank to match the on-the-spot offer. A spokesman for the bank told Belga news agency it would appeal.
Belgium's Federal Economy Minister Vincent Van Quickenborne said the verdict was an "unequivocal condemnation."
BRUSSELS — A Belgian court fined Citibank 165,000 euros (216,000 dollars) on Wednesday after determining it used "false advertising" to sell Lehman Brothers investment products without warning clients of risks. The court found that Citibank breached laws on commercial practices, having "minimised the risks" and having "led inexperienced investors to put money into the American bank." The tribunal said Citibank did not stop selling the products even though Lehman's credit rating had been downgraded.
Citibank sold 128 million euros worth of Lehman Brothers bonds to some 4,100 clients in Belgium. These bonds became worthless after the collapse of Lehman, the trigger for the world's deepest downturn since the 1930s Depression, in September 2008.
In February, Citibank said more than 97 percent of these clients had accepted a settlement, some of whom took a 65 percent redemption on the spot rather than wait for a potentially a higher figure later. For the remaining 120 or so clients who pursued the action, the court ordered Citibank to match the on-the-spot offer. A spokesman for the bank told Belga news agency it would appeal.
Belgium's Federal Economy Minister Vincent Van Quickenborne said the verdict was an "unequivocal condemnation."
Declaring medical condition
This consumer is not sure if his medical condition needs to be declared and if it affects the underwriting of his application. What is the correct approach? What should he do, if the terms imposed are too harsh?
Ask Mr. Tan
Ask Mr. Tan
Victor Foo and SCCCI
I know Victor Foo personally and wish to endorse his effort to get elected into the SCCCI council.Victor is positive and reliable and will meet his promise more activities and representation for small businesses. I encourage my blog readers, who are members of SCCCI, to vote for Victor Foo.
Dear Members of SCCCI
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