Nancy McGuirk: The Brevity of Life

"only one life, 'twill soon be past;

only what's done for Christ will last."

- C.T. Studd

a blog on: Financial Planning Advice - Christopher Pua

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

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.

a blog on: Financial Planning Advice - Christopher Pua

Fiat Currency or Real Assets, take your pick

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.

a blog on: Financial Planning Advice - Christopher Pua

Meltup

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.

a blog on: Financial Planning Advice - Christopher Pua

Overdose: The Next Financial Crisis

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.

a blog on: Financial Planning Advice - Christopher Pua

Close to 12,000 opt for CPF Life

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.

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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.

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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.

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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.

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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.'

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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'

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

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

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

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.