Financial Planning with Chris Pua

Testimony

2012-01-30T11:48:00.002+08:00

Testimony by Susan Ng: Jan 2012

God bless that I met Chris. When I'm most in need of help, he is so sincere and he gave me prompt service. Even though I'm not his client, he was willing to help me with my Critical illness claim. So, in future, if I have any insurance needs, I will surely look for Chris.

He doesn't mind the trouble coming by my place on several occasions to settle my claim document even though he doesn't earn any commission from me.

Ng Soh Shan

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Testimony

2012-01-30T11:20:00.003+08:00

Testimony by Chong Yin Kiat: Jan 2012

Testimonial for Christopher Pua.

I want to thank Christopher for the financial planning he did for my family. I know Christopher since 2000 and he has been my agent since my first child arrived in the year 2008. I particularly appreciate his approach "I put myself in your shoe", this is unlike other agents I met before, who were just interested to close the deals. There were few times unfortunate moments happen to my child, the policies from him is well covered. On top of that, he's responsive and efficient in chasing the claim process.

Yin Kiat

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Testimony

2012-01-30T10:55:00.003+08:00

Testimony by Lawrence Quek: Dec 2011

Chris has been my financial planner since 2008. I treat him like a close brother. I find him to be frank and sincere. I noticed that as a financial planner, he recommends plan according to my needs instead of pushing products to me. And from time to time, he will sit down with us to do a review with us and to refresh about the plans that we have purchased. I feel that the critical illness and hospitalization plan is a must for us as it will help us to lessen our financial burden when such events occurs.

I know a lot of insurance agents, but if there are friends who needs advise on protection or financial planning, I will refer them to Chris.

Lawrence Quek

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Testimony

2012-01-30T10:42:00.002+08:00

Testimony from Kelvin: Dec 2011

Chris has been very patient and meticulous. He has great leadership skill and is a people person. Focused on sourcing the best solution for his clients. Strong-willed yet caring individual. He is responsible and always there when you need his assistance. Would recommend his services to my friends for financial planning.

Kelvin Low Kay Kit

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Why you should stop trying to beat the market - Oct. 21, 2011

2011-10-22T11:10:00.000+08:00

Why you should stop trying to beat the market - Oct. 21, 2011

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Nancy McGuirk: The Brevity of Life

2011-04-28T10:56:00.000+08:00

"only one life, 'twill soon be past;

only what's done for Christ will last."

- C.T. Studd

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60 Minutes [CBS] - The day of reckoning - State and Local Budgets Crisis - State and Local Bon...

2011-02-24T21:35:00.001+08:00

The "day of reckoning" as the Senator Chris Christie puts it, is coming to all Americans as they realized that the states they lived in are running out of money and are unable to pay off their debt obligations when they are due. Their over spending and excessive benefits programs in the country has caused America to arrive at this state of their economy. They have dug a financial pit hole so deep that I believe it would take many future generations' labour to pay back their current debts, and that's provided they stop their overspending.

Watch this video, and get yourself prepared for the NEXT big Crisis that may bring America to its knee, and how it could affect your future even if you are living outside the USA.

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Fiat Currency or Real Assets, take your pick

2011-02-07T00:18:00.002+08:00

Ever wonder how the story of each fiat currency plays out in the end? Ever question why things are getting more expensive? What's the cause of inflation? is it true that food and things are getting scarce? Or are our money worth less now because loose monetary policies around the world?

So, if these fiat currencies are devaluing each day, wouldn't it be wise to store your monetary value in real assets like gold, silver and other commodities? Take a pick, because when the day of reckoning comes, it will be too late when you realized that your paper dollar has turned into monopoly money.

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Meltup

2011-02-05T23:20:00.001+08:00

I would to share this video I found on www.inflation.us it's a very interesting video on the impending hyperinflation that may strike the US economy, and how it will affect the whole economy and ultimately how it will matter to you. Educate yourself and be prepared for the next huge financial roller coster ride.

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Overdose: The Next Financial Crisis

2011-02-03T19:58:00.001+08:00

Educate yourself in what's coming our way. Man, when this next financial bubble burst, it's going to be so huge, it will make the Leman Brothers collapse and the 2008 crisis looks like child's play.

Prepare yourself for the mother of all bubbles.

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Close to 12,000 opt for CPF Life

2009-10-19T19:35:00.001+08:00

Source: Straits Times Oct 18, 2009

Close to 12,000 opt for CPF Life

By Jamie Ee Wen Wei

It has been a busy month at the Central Provident Fund (CPF) Board.

Members have been flooding its offices and phone lines with questions about the new CPF Lifelong Income Scheme For The Elderly (CPF Life), which was opened last month to those aged 55 and above.

Almost 30,000 people have walked into its five service centres to ask about the scheme, said Mr Tey Chee Keong, deputy director of CPF Board's lifelong income department.

Payout of $360 a month on retiring

In two years' time, when she turns 62, Madam Yeo Ai Kiaw (above) will get a payout of about $360 a month from her CPF Life Basic plan.

The plan, which has the lowest payout among the four options, will allow her to leave more money to her beneficiaries when she dies.

'My husband and I are now living with our son. He and his wife take care of all the household bills. I don't have to worry about anything,' said the sprightly 60-year-old.

Preparing himself for a longer life

Mr Palaniappan Kannappa is not afraid of death but he is worried about 'living too long'.

'The Minimum Sum in my CPF will dry up in about 20 years. What will happen if I live longer than that?' he said. So the 59-year-old accountant started shopping for a retirement policy a year ago.

Around that time, he read about the CPF Life plan, which was introduced to the public last year.

Mr Cheng Yew Fatt wants to remain independent in his old age

Mr Cheng Yew Fatt wants to remain independent in his old age.

For this reason, the 55-year-old, who is unemployed, signed up for the CPF Life Plus plan last month.

It provides him with a higher monthly payout than the Life Balanced plan, but leaves less for his beneficiaries. It suits him because he feels his three children are already well protected financially.

His savings will run out in 5 years

Mr Lee Poh Lee is a family man, but last month, he signed up for the CPF Life Income Plan, which will give him the maximum payout from his CPF from next year.

The 63-year-old, who runs a crane rental company, decided on this plan because his CPF savings are low.

'I've only about $19,000 in my CPF so it'll run out very fast.'

He's not signing up

When Mr Christopher Seet turned 55, he invested $70,000 from his CPF in an American International Assurance (AIA) annuity plan.

Early this year, he started getting a monthly payout of $562.

Now 62, Mr Seet does not intend to sign up for CPF Life. He said it does not bother him that the monthly payout he is getting now will last for only 17 years, unlike the CPF annuity scheme, which is for a lifetime. 'What is important is the present. If I really outlive my savings, then I'll just have to find some way to make ends meet.'

Stocks 'gain from crisis'

2009-10-19T19:23:00.000+08:00

Sources: Straits Times Oct 19, 2009

Stocks 'gain from crisis'

More investors turn to equities due to low bank rates and fewer options

By Alvin Foo, Markets Correspondent

THE equities industry has gained tremendously because of the global financial crisis, said the head of a key stockbroking company in Singapore.

Investors - faced with near-zero bank deposit interest rates and fewer alternative options for their funds - have turned to stocks in a big way.

This trend is set to continue, even as Western funds are expressing more interest in Asian stocks.

DBS Vickers chairman and chief executive Edmund Lee told The Straits Times: 'Our industry has benefited in a very big way, because there are only two asset classes that have performed in the last 12 months - equities and property.'

His company was named the best retail broker at the Securities Investors Association of Singapore (Sias) awards earlier this month.

In Singapore, the surge in the Straits Times Index (STI) bears witness to the renewed interest and liquidity in stocks. Last week, the index hit a 13-month high, crossing the 2,700-point mark. It has recouped all of the losses incurred since the sharp selldown following the collapse of Lehman Brothers.

Minibonds payback

2009-10-01T23:15:00.001+08:00

Source: Straits Times Oct 1, 2009

Minibonds payback
By Francis Chan

INVESTORS of Lehman Minibonds who are still holding the credit-linked notes should get some money back in 'a few months', said PricewaterhouseCoopers Singapore (PwC), receivers of the toxic investments on Thursday.

The announcement will bring some cheer to investors who were unable to come to settlements with distributors that sold the products. It also allays fears that the process to recover some of the hundreds of millions of dollars lost would be bogged down in lengthy cross-border legal wrangles.

PwC said the receivers have taken control of the underlying collateral of the notes and have started the process of realising the residual values before paying noteholders. The collateral consists mainly of corporate bonds held by two special purpose vehicles in the Cayman Islands.

The receivers reached an agreement recently with Lehman Brothers Special Financing (LBSF), the swap counter-party in the Minibonds programme here.

This deal clears the way for the next step, which involves the receivers appointing a disposal agent - believed to be a global investment bank - within the next few days.

The agent will begin liquidating the underlying collateral so that certain payment obligations, including some due to LBSF, can be made. The balance of the funds will be distributed to noteholders.

The amounts they receive will depend on what series or tranches of notes they are holding. PwC said the process will 'take a few months to liquidate the collateral and determine the actual value which can be realised'.

Although PwC could not say when noteholders might get some money back, or how much they will get, due to confidentiality obligations.

'This settlement provides certainty to the noteholders that at least some of their initial investment will be recovered,' said Mr Dominic Nixon, a partner at PwC and one of three appointed receivers from the audit firm.

The Monetary Authority of Singapore (MAS) said the deal with LBSF does not affect any claims individual investors are making against the financial institutions that sold them the notes.

'Investors who accepted partial settlement offers ... would have retained a portion of the notes, and will get to keep the residual value arising from those notes,' said MAS on Thursday.

More flexibility with new insurance law

2009-09-22T23:46:00.000+08:00

More flexibility with new insurance law

Policyholders can now change nominees, but law not retrospective. -ST

Source: Thu, Sep 10, 2009
The Straits Times

By Lorna Tan, Senior Correspondent

INSURANCE policyholders can name beneficiaries and change them when the need arises, thanks to the introduction of a new nomination regime.

The long-awaited Insurance Nomination Law provides policyholders of life, accident and health policies with more flexibility and control over how to distribute policy proceeds.

The new law came into effect on Sept 1 and is seen as a vast improvement on the arrangement it replaces, which did not allow policyholders to change beneficiaries even after a divorce.

This meant that if a policyholder named his spouse or children as policy beneficiaries, he effectively created a statutory trust even if he did not want to.

Policyholders were prevented from changing their beneficiaries, or cashing in their policies without the consent of beneficiaries.

Many policyholders learnt of this only during divorce proceedings when they discovered that their former spouses still had a claim on their policies, or when an insured person's death sparked a bitter family dispute.

Some did not realise that if they named other parties as beneficiaries, such as grandparents, siblings, aunts and friends, they had no legal claim to policy proceeds.

The controversies surrounding such trusts prompted the insurance industry to do away with nominating beneficiaries in life policies in 2002.

The exception is NTUC Income because its policy proceeds are paid to nominees under a different law - the Cooperative Societies Act - allowing a cooperative member to make a nomination, which can include spouse, children, relatives and friends.

Under the Insurance Nomination Law, customers have two choices - to either make a trust nomination, or a revocable nomination.

With a trust nomination, the policyholder relinquishes all rights to the policy. This means that while he is still obliged to pay premiums, all policy benefits - living and death - belong to the nominees. An advantage is that policy proceeds are protected from creditors in the event of bankruptcy.

The policyholder can regain his rights to own the policy benefits only with the consent of all nominees. And only the spouse or a child of the policyholder is eligible to become a nominee.

With a revocable nomination, the policyholder continues to retain full ownership over the policy. He retains the right to change, add or remove nominees at any time without the consent of nominees.

The policyholder will receive living benefits and only death benefits will be paid to the nominees.

Unfortunately, the new law does not apply retrospectively to existing policies with previous nominations, but existing policies with no previous nominations are eligible.

Although the new framework applies to personal accident plans, general or non-life insurers who sell such cover would not be keen to offer their customers the option to nominate.

The General Insurance Association said that this was due to the fact that such policies are renewable either annually or on a monthly basis.

'Hence any nomination by a policyholder will be valid for the period of insurance only, which can be as short as one month,' it added.

Nevertheless, the new law has been welcomed by many.

Mr Darren Thomson, president of the Life Insurance Association (LIA), said: 'For estate planning, the new framework provides all-important clarity and hence peace of mind.

'It gives policyholders legal options in naming their beneficiaries, and a choice of control over the policy - whether they wish to relinquish or retain their rights during their lifetime.'

LIA added that the nomination process is straightforward with forms that are easy to complete.

To help consumers, a guide is available on its website www.lia.org.sg

what you should know about CPF Life

2009-09-17T22:04:00.000+08:00

Source: Straits Times 13 Sept 2009

What you should know about CPF Life
By Lorna Tan, Senior Correspondent

In the coming weeks, about 700,000 Central Provident Fund (CPF) members aged 55 and above will be invited to join the CPF Lifelong Income Scheme For The Elderly (CPF Life). The annuity scheme offers a choice of four plans that pay a monthly income for as long as you live.

These plans offer various combinations of two key elements that are traded off: monthly payouts and refund amounts upon death or withdrawal from the scheme

In other words, if you want higher monthly payouts, that will reduce any final payout to your beneficiaries.

The initiative has been widely welcomed as being superior to the current CPF Minimum Sum (MS) scheme, which gives monthly payouts for about 20 years, but not necessarily for as long as you live.

The MS is the amount you are required to set aside at age 55 for retirement needs in your Retirement Account. The Retirement Account is set up when you turn 55 with savings coming from your Ordinary and Special accounts. CPF Life payouts come from the Retirement Account.

With rising life expectancy, it is prudent to ensure that your retirement savings will last for all your days.

The opt-in system began on Sept 5 and is open to older CPF members who wish to join the annuity scheme ahead of 2013, when it will be implemented for those turning 55 then. For older CPF members, the monthly payouts will start as early as next January.

While many are still undecided, some, like Madam Wong Kwai Sim, 55, have taken the plunge. She has opted for the CPF Life Balanced Plan, which will give her an estimated monthly payout of $856 to $948 when she hits 65.

Madam Wong, who works part-time as a clerk, currently has $117,000 in her Retirement Account, which is also the prevailing MS.

'By the time I can get the monthly payout, my children will be independent. I can get some from CPF Life and keep some for them when I pass away,' she said.

The Life Balanced Plan gives a moderate payout and a moderate refund. If she had stayed on the current MS scheme, her monthly payout would be some $910 for about 20 years.

Storeman Tay Lee Kheng, 61, said it was his son Benjamin, 32, who helped him choose the Life Plus Plan, estimated to pay $463 to $492 monthly when he turns 62 next year. He has about $80,000 in his Retirement Account.

'I'm not looking to get anything from him when he passes away. It is better that he gets a higher payout...All the money is his anyway,' said Mr Benjamin Tay. The Life Plus Plan provides for higher monthly payouts and a lower refund.

For those who have not decided, here are some things you should know about CPF Life. You must choose the most suitable plan as you cannot change it after you join the scheme. You cannot withdraw either, except under certain conditions.

Q Who can join CPF Life?

You can join CPF Life if you are a Singapore citizen or permanent resident aged between 55 and 80, with savings in your Retirement Account.

Those aged 55 to 79 have up to the time they reach age 80 to sign up for CPF Life. But those aged 80 and above have to do so by December next year.

A bonus of up to $4,000 is given to Singapore citizens who do so by December next year. To qualify, your annual income and the annual value of your property must not exceed $54,000 and $11,000 respectively.

Q What is the monthly payout?

Your monthly payout depends on your Retirement Account savings used to join CPF Life.

There is no minimum amount required, but note that members with lower balances will receive correspondingly lower monthly payouts.

Other factors that will affect the monthly payout include your gender, the age at which you join the scheme and the CPF Life plan chosen. Generally, females will receive lower payouts as they tend to live longer.

If you wish to have a higher payout, you may make cash and/or CPF top-ups to your Retirement Account up to the prevailing MS.

You can use the CPF Life Payout Estimator at the CPF website www.cpf.gov.sg to find out how the monthly payout varies with your Retirement Account balance.

Q Is the monthly payout fixed?

No, the monthly payout may be adjusted every year to take into account factors such as CPF interest rates and mortality experience.

The adjustments will usually be small so that payouts are stable.

The current estimated payout range is based on CPF interest rates of between 3.75 per cent and 4.25 per cent and do not necessarily represent the lower and upper limits of the payout.

Q When will I start receiving my monthly payouts?

If you join before your drawdown age (DDA), you will start to receive your monthly payout from your DDA.

If you join after your DDA, you will start to receive the monthly payout from the following month after you are included in the scheme.

If you were born in 1943 or earlier, your DDA is 60. For those born between 1944 and 1949, their DDA is 62. If you were born in 1950 or 1951, your DDA is 63 and if you were born in 1952 or 1953, your DDA is 64. For those born in 1954 or later, your DDA is 65.

Q Can I change my plan after I join?

No, you can't. This is because changing your plan will affect other members who are already in the scheme.

Q Can I withdraw after I join?

No, except on the following grounds:

Medical grounds of shortened life expectancy;
Leaving Singapore and West Malaysia permanently with no intention of returning to either country.

If you are on one of the three CPF Life plans with a refund feature, you will receive a discounted refund of the savings used to join the scheme less the monthly payouts that you have received prior to your withdrawal. There may not be a refund if your savings have been fully paid out in monthly payouts.

If you are on the Life Income Plan, which is a non-refund plan, you will not receive any refund if you withdraw from the scheme.

Q What happens when I die?

Let's assume you have opted for a CPF Life plan with a refund feature. If you die before any payout is made, the full savings will be refunded. If you die after monthly payouts have started, the savings less monthly payouts will be refunded.

Do note that there may not be a refund if you die after the savings used to join CPF Life have been fully paid out in monthly payouts.

Any refund will be made to your CPF account and paid to your beneficiaries, together with the rest of your CPF savings.

If you had chosen the CPF Life plan without a refund feature, that is, the Life Income Plan, there is no refund upon death even if monthly payouts have not started.

Q How do I choose the most suitable CPF Life plan?

The four plans differ in the level of monthly payout and the refund amount that may be left to your beneficiaries. The refund, also known as the bequest, is based on the savings used to join CPF Life less monthly payouts already received.

Alpha Financial Advisers' business unit director, Mr Tan Siak Lim, says that a CPF member should try to strike a balance between his retirement lifestyle and the bequest amount.

'You should consider the effect inflation will have on the payouts over your life. As these are level payouts, the value of payouts will shrink over time as prices of goods rise.'

Here are the four plans:

Life Basic Plan

This plan gives a lower payout than the Balanced Plan, but leaves more for your beneficiaries. It is recommended if you are in the pink of health or have sufficient savings outside your CPF, says Mr Patrick Lim, associate director at financial advisory firm PromiseLand Independent.

Life Balanced Plan

If you wish to strike a balance between your monthly payout and the bequest, the Life Balanced Plan may be more suitable for you. This is also the default plan for members who are automatically included under the scheme from 2013, if they do not choose a particular plan.

Mr Thio Eng Huat, vice-president at ipac financial planning Singapore, believes that those who are fortunate to have supplementary income in their retirement may find the Life Basic or Balanced plans more suitable.

Life Plus Plan

This plan provides a higher payout than the Balanced Plan, but leaves less for your beneficiaries.

Mr Lim says this will appeal more to individuals with chronic medical conditions who want the higher payouts to cope with the cost of living, and yet wish to leave something behind for their beneficiaries.

Life Income Plan

This plan gives the highest payout, but does not leave anything for your beneficiaries. Although it is logical to conclude that this plan may be more suitable for those who do not have beneficiaries, Mr Lim does not recommend this for anyone. This is in case the member changes his mind or if his personal circumstances change. Another reason is that there is no refund upon withdrawal from the scheme.

Q What else should I consider?

You should not depend on CPF Life to meet all your retirement needs as the payouts may be insufficient.

Start saving more and plan your retirement early. To bridge the gap, you can consider additional income plans like annuities from insurers, says Mr Tan.

Mr Lim recommends NTUC Income's annuity, which comes with a guaranteed monthly or annual payout, with a potential to receive higher payouts the longer the policyholder lives.

Also, ensure that you have funds set aside for medical expenses and insurance, says Mr Thio.

This article was first published in The Straits Times.

Dollar at multi-month lows

2009-09-11T20:30:00.001+08:00

Source: Straits Times Sep 11, 2009

Dollar at multi-month lows

The dollar fell to the lowest levels for months against the euro and the yen on Friday as upbeat economic data reduced demand for the safe-haven greenback. -- PHOTO: AFP

LONDON - THE dollar fell to the lowest levels for months against the euro and the yen on Friday as upbeat economic data reduced demand for the safe-haven greenback, dealers said.

The euro rose to a near nine-month high of 1.4627 dollars in early London trading. The dollar dropped to 90.98 yen - the lowest level since mid-February.

In later London trade, the European single currency stood at 1.4591 dollars compared with 1.4583 dollars in New York late on Thursday. Against the Japanese currency, the dollar fell to 91.04 yen from 91.74 yen on Thursday.

Gold headed back towards 1,000 dollars an ounce as the weak US unit made the metal cheaper for buyers holding rival currencies, pushing up demand, dealers said.

'The dollar continues to move lower setting a new low for the year against the euro... while the dollar has fallen more sharply against the yen,' said Mr Derek Halpenny, European head of global currency research at The Bank of Tokyo-Mitsubishi UFJ in London. 'Risk appetite has been supported by mostly positive economic data from China,' he added.

Chinese economic numbers fuelled dollar weakness on Friday and investor risk appetite, underlining hopes of a global economic recovery, said Rabobank International economist Jeremy Stretch.

China said industrial activity expanded by 12.3 per cent last month and retail sales jumped 15.4 per cent, while urban fixed asset investment rose 33 per cent in January-August due to massive government spending on construction.

Traders snapped up the currencies of countries exporting commodities to the Asian powerhouse, notably the Australian dollar.

In contrast to the upbeat Chinese data, Japan revised down its estimate of second-quarter growth to 0.6 per cent, from an initial estimate of 0.9 per cent.

Most analysts meanwhile expect the dollar to weaken further amid a growing sense that recovery from the worst global economic crisis in decades is taking root.

With the economic outlook brightening, traders tend to shun the dollar in favour of riskier currencies that appeared more profitable, like the euro. -- AFP

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Name your own Beneficiaries

2009-09-09T23:41:00.001+08:00

Source: Straits Times Sep 7, 2009

Policy rules eased

By Lorna Tan

POLICYHOLDERS are now allowed to name beneficiaries and change them when the need arises under a new nomination framework which kicked in on Sep 1.

The long-awaited-for Insurance Nomination law provides policyholders of life, accident and health policies, more flexibility and control over how they wish to distribute the policy proceeds. Customers have two choices, to either make a trust nomination or a revocable nomination.

This is a vast improvement from previously as the law did not allow a policyholder to change his beneficiary, even after a divorce. Back then, if you have named your spouse or children as policy beneficiaries, you have effectively created a statutory trust. This is even if you did not explicitly want to. It means that you cannot change your beneficiaries, or cash in your policy without the consent of the beneficiaries.

Many policyholders learn of this only during divorce proceedings when, to their horror, they find that their ex-spouses may still have claims on their policies. Or it comes to light only when the insured person dies, often sparking bitter family disputes.

Many policyholders also do not realise that if they name other parties such as grandparents, siblings, aunts and friends as beneficiaries, these people have no legal claim to policy proceeds.

The controversies surrounding such trusts prompted the insurance industry to do away with nominating beneficiaries in life policies since 2002.

The exception is NTUC Income because its policy proceeds are paid to nominees under a different law - the Cooperative Societies Act - and this Act allows a cooperative member to make a nomination, which can include spouse, kids, relatives and friends.

This is how the new framework operates.

With a trust nomination, the policyholder relinquishes all rights to the policy. This means that while he is still obliged to pay the premiums, all policy benefits - living and death - belong to the nominees. An advantage of this is that the policy proceeds are protected from creditors in the event of bankruptcy.

He can only regain his rights to own the policy benefits with the consent of all nominees. Only the spouse, or a child, of the policyholder is eligible to become a nominee under a trust nomination.

With a revocable nomination, the policyholder continue to retain full ownership over the policy. He also retains the ability to change, add or remove nominees at any time without the consent of the nominees. The policyholder will receive living benefits and only death benefits will be paid to the nominees.

Company Travel insurance

2009-09-09T23:38:00.001+08:00

source: Straits Times 8 Sept 09

Travel insurance

My husband's boss replied that half the claim would go to the company. It does not make sense.'

MADAM GERTRUDE TAN: 'Recently, my husband flew to Paris. On the return trip, the plane was delayed by six hours due to a technical fault. My husband's company had bought travel insurance for him, so his boss asked him to claim for the delay from the insurance company. Great Eastern Life was very efficient, and a cheque for $200 was made payable to my husband in due course. However, my husband's boss told him to return the cheque. My husband argued with her that what if there was a plane crash and I could not claim insurance. My husband's boss replied that half the claim would go to the company for the loss of an employee. I sought advice from the Ministry of Manpower, but the labour relations officer said the Employment Act did not cover this insurance rule. It does not make sense that an insurance claim is paid to the company. If there was a claim for lost luggage and it was paid to the company, it would not be fair to the employee who lost the luggage.'

New rules on products

2009-09-09T23:22:00.000+08:00

Source: Straits Times Sep 8, 2009

New rules on products

By Gabriel Chen
MAS announced its decision as part of its response to feedback it has received on a slew of changes proposed in the wake of the collapse of Lehman-linked structured products. -- ST PHOTO: RICHARD CHNG

FROM now on, retail investors can expect financial products to fall clearly into two categories.

Products that fully protect an investor's principal sum are labelled 'capital guaranteed' - anything else carries the possibility of a loss.

That's because the Singapore's financial regulators have decided to ban a puzzling in-between category of investments that currently carry the monikers 'capital protected' or 'principal protected'.

There are no agreed definition for these terms, which are not easily understood by investors, said the Monetary Authority of Singapore (MAS) on Tuesday.

MAS announced its decision as part of its response to feedback it has received on a slew of changes proposed in the wake of the collapse of Lehman-linked structured products.

These proposals, first released in March, were mooted in response to controversy over the way complex investment instruments were sold to people, including many elderly and lowly educated folk.

Some of the key changes require financial institutions to provide customers with simple, user-friendly 'product highlights sheets' and provide 'health warnings' on complex investments in appropriately large font.

MAS has also proposed that bank tellers should not sell investments and there should be a seven-day 'cooling off' period during which an investor could change his mind and pull out of his investment.

In a 19-page document on Tuesday, the financial regulator outlined public responses it had received, and said that it would adopt most of the proposals.

The ban on the use of the term 'capital protected' will apply to mass-market products familiar to retail investors, including structured deposits, unit trusts and investment-linked life insurance policies.

Some investors have previously raised concerns that they had difficulty understanding what those terms meant, MAS said.

A 'capital protected' product is where the principal sum is ploughed into investments like bonds which, on maturity, are expected to provide the 100 per cent capital protection.

But this is not a certainty.

'The bonds could turn sour and affect the value of the investment, and people may not get back 100 per cent,' said First Principal Financial's chief executive Mohamed Salim.

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Shipwreck survivor dies

2009-09-03T22:54:00.000+08:00

Source: Straits Times Sep 3, 2009

Shipwreck survivor dies

By Serene Luo
This picture was taken last year in happier times at the Singapore Cricket Club. In foreground, Mrs Wendy Goh and Mr William Goh Lye Guan, in back row, from left to right, Ryan, Russell, Reuben, and Rachel. -- PHOTO: COURTESY OF THE GOH FAMILY

A CLOSE shave with death when a cruise ship sank made a Singapore money broker steer a new course in life, making family his priority.

Mr William Goh Lye Guan was one of the survivors of the sinking of the Royal Pacific, a Singapore-based cruise liner that collided with a Taiwanese trawler in the Malacca Straits in 1992.

Following the tragedy, which claimed the life of a family member, Mr Goh cut back on his work and even became a stay-home dad, a notion virtually unheard of even today.

He took pride in running a tight ship with his brood of four, ferrying them to and from school, tuition and ballet classes.

But on Monday, this devoted and loving father died following a year-long battle with oral cancer. He was 52.

The ill-fated Royal Pacific had been on its maiden voyage in 1992, a three-day cruise to nowhere.

Mr Goh was on the ship with his wife Wendy, now 52, and his first-born and only daughter Rachel, now 19. His wife's sister and husband were travelling with them.

Of the nine missing or dead, six were Singaporeans, including Mr Goh's brother-in-law, architect Charles Law, who died while trying to escape.

Mr Goh and Mr Law were good friends, said Mr Goh's brother Steven, 47, and the tragedy probably made him take stock of his life. Mrs Goh started her childcare business in 1995, and the couple decided around then that 'Daddy would stay home to take care of the kids'.

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AIG extends improbable rally

2009-08-28T22:18:00.001+08:00

Source: Straits Times Aug 28, 2009

AIG extends improbable rally

AIG reported in July second-quarter earnings of US$1.8 billion. -- PHOTO: AP

NEW YORK - INSURANCE giant AIG extended its surprising rally on Thursday, rising 26.9 per cent amid frenzied speculation along with improved prospects on its ability to repay its massive government bailout.

AIG shares closed at US$47.84 (S$68.89), up US$10.15 in a day and some 400 per cent from recent lows on July 9, before the ailing firm announced its first profit in nearly two years.

The rally has spread to other troubled financial firms including Fannie Mae and Freddie Mac, the two mortgage finance giants taken over by the government nearly a year ago. Some analysts said the rally was a 'short squeeze' in which market players who had bet on a decline are forced to purchase shares to cut their losses, resulting in upward pressure on stocks.

Analysts at Briefing.com said the gains were a 'garbage rally' in the most at-risk financials, 'which began late yesterday afternoon with the massive short squeeze in AIG.' The surge 'wasn't the result of a specific news-related catalyst; instead, it started as a small rally in the afternoon, and as it started to gather steam and accelerate it forced shorts to panic and scramble to cover,' the note to clients said.

'Since AIG is the most volatile name in the 'at-risk financials' group, this created one of those momentum themes where coming in this morning, traders saw AIG continuing to squeeze in pre-market trading, and so they started to bid up the other low-quality financial stocks.' Andy Brooks, head of equity trading at T Rowe Price, said AIG 'looks like a stock that may be salvageable, so that has drawn investor attention. The same thing has happened to Fannie and Freddie.' But he noted that AIG stock 'is still down a down a ton from its highs' over US$1,000 a few years ago.

AIG was the largest single recipient of US bailouts, with the government pumping more than US$170 billion into the firm to keep it afloat and taking a controlling stake in the group in the process. It reported in July second-quarter earnings of US$1.8 billion.

The company said its return to profits came as some 'businesses stabilized and the company's results reflected positive valuation changes. AIG also achieved several important milestones in its restructuring programme.' AIG was on the verge of collapse last year after backing trillions of dollars in risky financial products amid a home mortgage meltdown that triggered financial turmoil.

Jon Ogg at 24/7WallSt.com said some of the AIG interest came on reports that new chief executive Robert Benmosche had talked with founder and former CEO Hank Greenberg about efforts to help rescue the firm. Joe Weisenthal at the financial website Clusterstock said the AIG rally was 'insane' since the government would have to be repaid before shareholders could benefit.

'Nobody knows what's going on, really. It's all rumor and speculation,' he said. Among other financials, Fannie Mae rose 3.78 per cent to US$1.92 dollars and Freddie Mac jumped 10.34 per cent to US$2.24. Citigroup, the bank with the biggest US bailout, jumped 9.07 per cent to US$5.05. -- AFP

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US consumer spending up 0.2%

2009-08-28T22:10:00.001+08:00

Source: Straits Times Aug 28, 2009
US consumer spending up 0.2%
WASHINGTON - US CONSUMER spending rose for the third consecutive month in July while incomes were virtually flat, government data showed on Friday in a report suggesting demand picking up amid the long recession.
The Commerce Department said consumer spending - which drives two-thirds of US economic activity - rose 0.2 per cent in July, in line with the average analyst forecast.
Personal income was up less than 0.10 per cent and disposable personal income - income less personal taxes - slipped less than 0.1 per cent.
The department said spending rose a revised 0.6 per cent in June, a hefty 0.2 percentage point higher than the initial estimate.
The June surge in consumer spending had been captured in the Commerce Department's report Thursday on second-quarter economic growth, which showed spending fell at an annualized rate of 1.0 per cent, a decline less steep than first estimated.
In that report, the department left unchanged its initial estimate that gross domestic product, which measures output, shrank 1.0 per cent at an annual pace in the April-June period, better than analysts forecasts of a 1.5 per cent decline.
Friday's consumer spending and income data showed that consumer prices held steady in July from June.
As a result, real consumer spending - excluding price variations - rose 0.2 per cent in July.
Real disposable income fell 0.1 per cent in July, following a 1.6 per cent decline in June.
Americans struggling with the worst recession since the Great Depression continued to save in July but at a slower pace, with the savings rate as a percentage of disposable income falling to 4.2 per cent.
The savings rate had hit its highest level since 1995 in May as households hunkered down as unemployment surged in the sharp recession that began in December 2007. -- AFP
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Figures add up nicely for GE Life

2009-08-27T23:50:00.000+08:00

Figures add up nicely for GE Life

By Larry Haverkamp, For The Straits Times

Taken from the Straits Times , August 27, 2009 GREAT

Eastern Life Insurance looks to be everyone’s pick for the most generous company of the year. The company wants to help its policyholders by buying back their GreatLink Choice (GLC) structured notes. These are similar to minibonds but there are more of them. Minibonds worth $508 million were sold to 10,000 investors, while $594 million worth of GLC notes were sold to 18,000 investors. If the notes default over the next four years, investors would lose the $594 million they had sunk in. The company says it will lose $250 million by buying the notes back. It looks generous. Great Eastern will require its agents to pitch in too. They will return the $12 million they made in commissions from selling the notes. This glowing story has been widely reported. On the surface, it might appear investors would be foolish to turn down Great Eastern’s offer. But that may well be wrong. GLC comes in five tranches. GLC 1 and 2 make up one similar group while GLC 3, 4 and 5 are another. A Sunday Times report by Ms Lorna Tan correctly calculated that GLC 1 and 2 are safer investments than GLC 3, 4 and 5. Does that mean the buyback is not in the best interests of GLC 1 and 2 investors? In a word: Yes. Does that mean the offer would benefit Great Eastern at the expense of these investors? In another word: Yes. Instead of helping GLC 1 and 2 investors, it would bite them a second time. The first was when Great Eastern sold GLC without disclosing the total returns of the underlying bonds. That is the standard way for structured notes to conceal risks. The public is shown only the investor yields – such as 3.5 per cent to 4.9 per cent annually for GLC. This lulls investors into thinking risks are moderate. They never see the high-risk returns produced by the note’s underlying assets of junk bonds and credit default swaps. The second bite comes now with the offer to buy back the notes. It will take a safe 17.5 per cent return from GLC 1 and 2 investors and give it to Great Eastern. Less generous than it appears BY 6PM tomorrow, Great Eastern will have bought back many of its GLC notes and written them down to ‘fair value’. It says the write-down will result in a $250 million loss. That estimation could help the company sell its buyback offer. Investors see $250 million as a lot of money to turn down. In fact, Great Eastern’s loss may be much less:

First, the $12 million clawback of commissions from agents will go entirely to the company. Investors will not get a dollar.

Second, Lion Global was the fund manager for GLC. Its management fees totalled 8 per cent to 11 per cent on the $594 million value for all five GLC tranches. Much of that was paid upfront – and unlike the clawback of agent fees, Lion Global will not be required to return its fees.Lion Global is 100 per cent owned by Great Eastern and OCBC Bank, while OCBC owns 87 per cent of Great Eastern.

Third, GLC 1 and 2 are likely to produce high profits for Great Eastern. They make up $209 million – or 35 per cent of the $594 million worth of notes sold.Just over half the investors have accepted Great Eastern’s buyback offer so far. Why so many when it is not in their interest? The current price for the notes is set at 61 cents on the dollar, according to the company website’s pop-up ad and newsletter – a buy-only price, set by the underwriter, which is Deutsche Bank for GLC 1 and 2. Investors who redeem early must sell at that price and sell only to the underwriter. This is likely to bias the price downwards. Great Eastern’s offer is valued at $1 minus the dividends already paid of 10.5 cents. So $1 – $0.105 = $0.895 – easily more than 61 cents. Investors would conclude: ‘It’s a no-brainer. I accept!’ Besides the downward price bias noted above, the 61 cent price on the website is out of date. The more recent price is 73 cents, which makes the offer less attractive to investors. It can also be found on the website, though not as easily.

Fourth, GLC 1 and 2 investors must give back 10.5 per cent in clawed-back dividends. They must also forgo the 3.5 per cent that was to be paid at the end of September and October, plus another 3.5 per cent due at maturity in 13 and 14 months. So 10.5 + 3.5 + 3.5 = 17.5 per cent – that is the ‘one year’ return investors will receive if they reject the offer and hold GLC 1 and 2 to maturity.

While that 17.5 per cent yield is high, the risks remain low for two reasons:

One, GLC 1 and 2 have underlying collateralised debt obligations (CDOs) that reference bonds rated BBB- by Standard & Poor’s (S&P). Their time to maturity is just over one year. S&P data shows the one-year default rate for BBB- global corporate bonds from 1981 to last year was only 0.6 per cent. That is less than one bond out of 100 defaulting.

Two, the rules for GLC 1 and 2 do not place them near default. Only six out of more than 100 bonds held by either tranche have suffered ‘credit events’ in the past four years. Another 11 bonds must go bad before investors lose any capital. With the improved economy, it is unlikely that 11 more bonds will go bad within 14 months.If this scenario plays out and GLC 1 and 2 do not default, investors will get back 100 per cent of their investment in little more than a year. Though there is a slight risk, that 17.5 per cent return more than compensates for it. In its automated e-mail messages, Great Eastern gives the opposite advice: ‘Do not miss this chance to accept the offer,’ it says.

Accept the buyback for GLC 3, 4 and 5 GLC 3, 4 and 5 – valued at $385 million – are different. The underwriter has priced GLC 3 at 36 cents on the dollar, and GLC 4 and 5 at 23 cents. These figures probably understate the value of the bonds for the same reasons as for GLC 1 and 2, but in this case, it does not matter. The value of these bonds is so far underwater – below the buyback price – that some degree of under-pricing won’t affect the investor’s decision.

First, the underlying CDOs of GLC 3, 4 and 5 are rated CCC- by S&P. Their time to maturity is three to four years. S&P data shows that the three-year default rate for CCC- global corporate bonds from 1981 to last year was 39 per cent. The four-year default rate was 42 per cent.

Second, the CDOs backing GLC 3, 4 and 5 reference more than 100 bonds each. The contract requires that an additional 10, seven and five bonds in GLC 3, 4 and 5 must go bad before investors lose their capital. This is more likely to happen since the time to maturity for these tranches is three times longer than for GLC 1 and 2 and their bond quality is much lower.

There is no need to feel sorry for Great Eastern. The buyback is not as expensive as it seems, even for GLC 3, 4 and 5. The notes are structured as a wager rather than an investment and work like this: Only 10 per cent to 15 per cent of the underlying bonds need to suffer credit events before investors must forfeit the other 85 per cent to 90 per cent of good bonds to ’someone’. That someone is usually the underwriter or arranger – Goldman Sachs for GLC 3, 4 and 5. Great Eastern could simply inherit this deal from investors. Or it might reduce its risks by first entering into a hedge or re-insurance agreement with Goldman Sachs or others. Great Eastern has not said if it did this although it would not be unusual. The company’s losses on GLC 3, 4 and 5 would be further reduced by: One, the expected profits from GLC 1 and 2; two, the clawback of agent commissions; three, the management fees earned by Lion Global; four, the profit sharing – if any – with the underwriter; and five, tax savings should losses occur. Four years from now – when the notes have all matured – the net loss to the OCBC group is likely to be substantially less than the trumpeted figure of $250 million. The writer is a financial columnist for The New Paper and Adjunct Professor of Economics and Statistics at Singapore Management University.

Figures add up nicely for GE Life

2009-08-27T23:46:00.002+08:00

Figures add up nicely for GE Life

By Larry Haverkamp, For The Straits Times

Taken from the Straits Times , August 27, 2009 GREAT

First, the $12 million clawback of commissions from agents will go entirely to the company. Investors will not get a dollar.

Second, Lion Global was the fund manager for GLC. Its management fees totalled 8 per cent to 11 per cent on the $594 million value for all five GLC tranches. Much of that was paid upfront – and unlike the clawback of agent fees, Lion Global will not be required to return its fees.Lion Global is 100 per cent owned by Great Eastern and OCBC Bank, while OCBC owns 87 per cent of Great Eastern.

Third, GLC 1 and 2 are likely to produce high profits for Great Eastern. They make up $209 million – or 35 per cent of the $594 million worth of notes sold.Just over half the investors have accepted Great Eastern’s buyback offer so far. Why so many when it is not in their interest? The current price for the notes is set at 61 cents on the dollar, according to the company website’s pop-up ad and newsletter – a buy-only price, set by the underwriter, which is Deutsche Bank for GLC 1 and 2. Investors who redeem early must sell at that price and sell only to the underwriter. This is likely to bias the price downwards. Great Eastern’s offer is valued at $1 minus the dividends already paid of 10.5 cents. So $1 – $0.105 = $0.895 – easily more than 61 cents. Investors would conclude: ‘It’s a no-brainer. I accept!’ Besides the downward price bias noted above, the 61 cent price on the website is out of date. The more recent price is 73 cents, which makes the offer less attractive to investors. It can also be found on the website, though not as easily.

Fourth, GLC 1 and 2 investors must give back 10.5 per cent in clawed-back dividends. They must also forgo the 3.5 per cent that was to be paid at the end of September and October, plus another 3.5 per cent due at maturity in 13 and 14 months. So 10.5 + 3.5 + 3.5 = 17.5 per cent – that is the ‘one year’ return investors will receive if they reject the offer and hold GLC 1 and 2 to maturity.

While that 17.5 per cent yield is high, the risks remain low for two reasons:

One, GLC 1 and 2 have underlying collateralised debt obligations (CDOs) that reference bonds rated BBB- by Standard & Poor’s (S&P). Their time to maturity is just over one year. S&P data shows the one-year default rate for BBB- global corporate bonds from 1981 to last year was only 0.6 per cent. That is less than one bond out of 100 defaulting.

Two, the rules for GLC 1 and 2 do not place them near default. Only six out of more than 100 bonds held by either tranche have suffered ‘credit events’ in the past four years. Another 11 bonds must go bad before investors lose any capital. With the improved economy, it is unlikely that 11 more bonds will go bad within 14 months.If this scenario plays out and GLC 1 and 2 do not default, investors will get back 100 per cent of their investment in little more than a year. Though there is a slight risk, that 17.5 per cent return more than compensates for it. In its automated e-mail messages, Great Eastern gives the opposite advice: ‘Do not miss this chance to accept the offer,’ it says.

First, the underlying CDOs of GLC 3, 4 and 5 are rated CCC- by S&P. Their time to maturity is three to four years. S&P data shows that the three-year default rate for CCC- global corporate bonds from 1981 to last year was 39 per cent. The four-year default rate was 42 per cent.

Second, the CDOs backing GLC 3, 4 and 5 reference more than 100 bonds each. The contract requires that an additional 10, seven and five bonds in GLC 3, 4 and 5 must go bad before investors lose their capital. This is more likely to happen since the time to maturity for these tranches is three times longer than for GLC 1 and 2 and their bond quality is much lower.

New consumer watchdog

2009-08-26T00:32:00.001+08:00

Source: Straits Times Aug 25, 2009

New consumer watchdog

By Francis Chan, Finance Correspondent

A NEW consumer watchdog was launched on Tuesday to keep closer tabs on financial institutions and their sales processes.

Formed by former Income chief executive Tan Kin Lian, the Financial Services Consumers Association (FiSCA) is an independent and not-for-profit organisation that sets out to strengthen financial consumer protection.

The move to set up FiSCA came after thousands of retail investors here lost their savings on complex structured products.

FiSCA will focus on education and research. It will hold seminars and consumer forums for members to enhance their understanding of financial services and products.

"Ultimately, our focus is to educate people on how to make choices," said Mr Tan, who will head FiSCA as president.

"But even before we learn to assess the more complex products, we must make sure we have the basic understanding first. If not, we may be easily taken for a ride."

Mr Tan said for an annual membership fee of $36, members can also access its services, which will also include an online platform.

A survey has found that investors here want a truly independent watchdog that is not funded by any financial institution, said Mr Michael Zhan, FiSCA committee member.

To maintain its impartiality, FiSCA will not seek funding from financial institutions, said Mr Tan.

FiSCA hopes to raise additional funding from government agencis and other philanthropic organisations that want to promote consumer financial education.

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New consumer watchdog

2009-08-26T00:32:00.000+08:00