Wednesday, April 30, 2008

NTUC Income Change of Bonus Scheme

NTUC Income recently sent a letter to all their Policyholders with regards to a change in their bonus scheme. They are reducing the Annual Bonus and increasing the Special Bonus. This change will affect how bonus are allocated to their participating life insurances.

What is it about?
* Annual Bonus are given to the policyholder on a yearly basis.
* Surrender/Maturity Bonus are given to the policyholder when he/she surrender the policy or on maturity.
* NTUC Income will give lower yearly bonus and therefore policy will show a lower value.
* However on maturity or surrender, NTUC Income will give a surrender bonus to boost the amount before the Policyholder get his surrendered amount.

Is the change for the good or for the bad?
* I have to say. No one knows for sure because the answer will only be known 15,20 yrs down the road. If NTUC Income continues to manage their Life Insurance Fund well, the change will most likely be towards the good. If NTUC Income mismanage their fund, the change will not be good for their policyholders.
* However, if NTUC Income don't change, they may lose to other insurance companies in getting a better returns on their funds due to restrictions in the way they invest their money.
* When they get a lower returns, they will eventually gives lower bonus to their policyholders too.

What did some bloggers say?
* Many of them are emotional. They did not fully understand how the change will affect their policies and why the company need to adopt this practice. Some disclosed their diasppointment and announced that they will terminate their policies.
* Terminating a policy prematurely will adversely affect the potential yield of your policy and the existing coverage that you have. It is not wise to do it and DO NOT BE EMOTIONAL...

My meeting with their Appointed Actuary
I was particularly concerned with this issue and I have an opportunity to ask some question to Mr Ken Ng, their Appointed Actuary. I questioned him on the rational of this change and if a scenerio of them declaring a very low surrender bonus in recession years are possible.

* He answered me that the change is necessary for the long term viability of the company. They need to take slightly higher risk towards investing their life insurance fund. Their current practice of giving generous annual bonus are forcing them to keep more funds in bonds and money market. If asset allocation is not changed, they may eventually give a lower returns to policyholders in the long term.
* He also assured that they are aware of the past when some insurance companies declare a very low surrender value in years of recession. They counter this by ensuring that they will put aside reserves in booming years to cover the loss during recession years.

How I feel after the meeting?
* I accepted his reasoning and I have trust in NTUC Income that they, being a cooperative, will continue to serve well for their policyholders.
* I like to re-assure my policyholders that NTUC Income remains a well managed company and I will continue to recommend plans from NTUC Income.


Anonymous said...

Adrain, if you are promoting a new product or selling to someone this product with this bonus , no one is going to find fualt with you because there is a choice to buy or not buy.
But now we are in it. We had been enjoying it and we bought it becuase of this structure and this was the basis of our contract with ntuc. Changing it is breaching the contract, you understand. Don't give me the crap that if I wait long enough there is pot of gold waitng for me, my money I would have gotten them along the way. This is absolutely bull shit. You are a CFP. A dollar today is worth more than a dollar tomorrow, right?
What craps is your actuary telling us. He is taking us as fools or suckers. Adrain,if you have been fair in your reasoning probably we can understand but you are parroting the company.

Anonymous said...

Ntuc is a big cheat. i will repot to police

blackbox said...


The reasons for change is sound. I would highly advise you to sound out to the NTUC Income management to put their brains together on the communications aspect.

More has to be done to effectively communicate. This is more so when some agents do not seem to understand the rationale behind the change.

Anonymous said...

You better accept and find ways to talk your policyholders around. You better grease up your arse too because it is not easy as you think.
You said that you are not ntuc agent but you are defending it with your life it seems.
Anyway get your arse ready for the screwing by your policyholders. if you think you are convinced by your actuary and your policyholders are like you ,so easy to buy the story. Just wait around and your arse will be so sore that you can't sit.

Anonymous said...

come on! be reasonable! nobody held a gun to your head to buy the policy!

I bought it and will have to live with this as well.

there is no different to buying share or even joining a company that over promimses.

if you want more certainty then keep in fd or buy bonds

Anonymous said...

Blackbox, the soundness of the change is not the issue. Ntuc can do whatever it likes with NEW plans but not stealing from the old plans. This is what makes a lot of people unhappy. Stealing , yes it is stealing because ntuc has made it SO dififcult fot people to enjoy the bonus by pushing it beyond their reach.Isn't this robbing them in broad day light.
We have enough of the unethical and unscrupulous ntuc agents already and now is the company's turn.
Right, ntuc is big cheat.

Anonymous said...

come on,3.22am, isn't what ntuc is doing / holding a gun to your head?
want or don't want ,you must want.
You are a hero,. i wonder how much or large is your policy. If it is kerchil kerchi one, of course you don't mind. You can throw it into the river.
Now you say, that there is risk in buying wholelife. Why didn't you tell me? My decision would have been different, right.This is non disclosure,Mr. Expert.
So FD or bonds are better. I am learning new things today. Thanks to 3.22
Thanks to Adrain for allowing me to air my ..... to

Khiat Han Hwee Adrian said...

When a policy was taken up, there was no mention of how many Annual Bonus and how much Surrender Bonus will constitute the Cash Value at respective years.

The Guaranteed Cash Value in the Benefit Illustration remains the same. Insurance Company cannot amend it, but they will have the rights to adjust the non-guaranteed surrendered value.

It will be quite interesting to see if MAS or CASE will stop NTUC Income from changing the bonus scheme. Personally, I don't think so.

Such change in bonus scheme add on another reason for people not to get traditional insurance policies. But who knows, those who choose to believe in the new scheme may eventually get a higher returns compared to today.

Anonymous said...

Adrain, the issue is not about ntuc changing the bonus. It is about policyholder be given the options to stay or to accept the new scheme. It is unfair to use unilaterally force upon your policyholders. Your new scheme works or not is another matter.It is debatable. My calculation is many stand to lose and the company happily can pocket them. Is that ntuc 's aim? or the new management 's aim. This new management sucks.
A bird in the hand is worth two in the bush.


Anonymous said...

For new policies NTUC has the right to change the scheme to what ever they want.

However, for existing policies,
NTUC should give people a choice if they want to remain with the old scheme of higher annual bonus or not. Changing the scheme half way, smacks of arrogance and akin to moving the goal posts whenever they like.

Hey, that sounds like the election boundaries before an election too!
Tan Kin Lian should have remained as the CEO of INCOME. At least he had the interest of policy holders in his heart.

Khiat Han Hwee Adrian said...

I took up Insurance Plans from NTUC Income in 1998, 2003, 2005 and 2007.

I don't even know how they pay the annual bonus and special bonus.
I only look at the guaranteed and non guaranteed cash value in the benefit illustration. I believe most people are just like me.

I think the public just wants to whack the company in any opportunity they have. I'm not surprised that these people are actually competitors of NTUC Income.

Anonymous said...

It is dangerous to buy from you. You don't even know what you bought. So, do you expect your customer to look at the same way you do. This is what is happening now. No complete disclosure. Customers see and they buy. They expect ntuc to deliver what they saw long time a go as in the quoatations. if all companies , like ntuc keep changing the goal post as and when they like, this is uncertainty, right? Ntuc must be punished for its arrogance,, especially the guy who left and came back to this industry. He should go bsck to his HR business and use pyschology skill to size up candidates but this time he is wrong. he misjudged.

blackbox said...


The issue is not whether people are competitors or not. And I am starting to understand that it is not a matter of right or wrong too. (since in principle I agree this should benefit policyholders)

The real issue is how people are perceiving the NTUC Income management to be high-handed in the way they managed this matter. It seems to be a uni-lateral decision.

Think about it. When our government wants to build the IR or introduce CPF Life, or even introduce Means Testing. Did you realize they went through many rounds of talk and consultations before finally making the unpopular decision?

You may disagree and say NTUC Income is not a government. But I think people do see it as a natural extension of our government (possibly a close cousin in analogy) being the case it was founded by Dr Goh Keng Swee. And there are expectations built up over the years.

As I earlier posted, the NTUC Income management has to do more to communicate and manage this change. Not everything is about being right; it is about commuicating and managing changes.

Anonymous said...

Adrain, people have memories of the
past screwed ups by insurance companies. Assuming we are your competitors then you will assuming a wrong solutions. The fact is your company ,ntuc actuary screwed it up. He didn't forsee the uproar. He thought policyholders are stupid and could not calculate.He miscalculated.
He is now finding excuses to justify
actions.No one trusts NTUC any more

Anonymous said...

Talking about better return over the long term and smoothing are actuary's rubbbish. You beleive that? They are running out of reasons. They are plugging up some holes for all you know. Don't blame you, your bread and butter is at stake but that is not being honest, right? It is a conspiracy<> hope it is not another KFC saga.....golden goose and golden tap and golden scissors and golden stapler.

Khiat Han Hwee Adrian said...

I believe that NTUC Income Management is cracking their heads to clear the air with their Policyholders after all the noises in Internet forums, blogs and newspaper.

It is not a popular decision. It is just like cutting your wage for higher bonus at the end of the year. Some companies adopt that to protect the risk of high wages.

Nobody will like to hear such thing, I agree. Frankly telling, how many people actually knows about Special Bonus and Annual bonus when they take up the policy? Is it such a big concern that they wants to terminate their policies? Is the annual bonus the main reason they take up policy with NTUC Income in the past?

There is surely a lot of mistrust with the company among policyholders now. The management will need to clear the air asap.

Anonymous said...

When your actuary talks about smoothing he is talking about smoothing his arse. What is there to smooth. Al these 30 years any problem with smoothing? The high annual bonus was still paid if the investment was good. Unless your actuary is up to no good. he has problem managing the life dund.It may be insolvent. Where are the cooperative values i heard you guy say whenever they want to sell something? 98% now where to.To let the fund managers play play for better return of annual bonus as special bonus.It is like return of capital.I think he overspent and he looking some way to repair the hole. Cut the annual bonus is the best way out.After all everyone is doing , why not ntuc. It is escape route for the management. Tell your actuary to suck eggs if he thinks he can bull three old kids or take policyholders as bunch of suckers.

Anonymous said...


As a former IA with income, I know about SB and AB. I looked into every line before signing a policy myself.

The crux of this matter is that INCOME does not GURANTEE that the change will be better, but just say "COULD".

Let me give you a simple example. My policy of 10 is 10 yrs old, annual bonus is $100 each year for past 10 years. Total bonus (excluding special) is at least $1000. With this new structure kick in, how much will my SB be? will it take into account for the 10 yrs? at wat rate? same rate each year? You see, there is no visibility. That is a big problem. With the new structure and lets say there is a major recession and every company is losing money and I want to terminate my policy. INCOME have the right to just give a miserable terminal bonus with this new structure.

Anonymous said...

2.15am, you are absolutely correct.
Insurance is about when you need it, it is available but now. so little.
Adrain, it is better to be honest with policyholders instead covering it up by false reasoning.
your actuary is bull, Your ceo might have a golden tap and jacuzzi in his room. Should go and see

Anonymous said...

If annual bonus and special bonus are not a concern why the f... we bought wholelife plan. Adrain, sometimes i find you confused. Seeing your string of qualifications I thought we are dealing with a knowledgeable man.
You are no difference from the rest..I thought you are better than one helmi big mouth who spews out garbages, you also ask a very stupid question.
Let me ask you in return.Which of these bonuses you can see growing ?
Which one you cannot see and maybe cannot get too? Tell which you prefer or everyone would prefer?
I hope to see your answers in my next visit.

Loh Hon Chun said...

Let's see how the NTUC Income management got to say during the upcoming AGM.

Adrian, do you mind telling us are you really an adviser from NTUC Income? We are very curious.


Anonymous said...


Adrian is an IA with Income and is an active participant on the internal forum page.

It is good to see that Adrain meet up with Income acturay, but Adrian, you should not be a 'yes' man.

Put yourself in the shoe of your customer, ask all tough but valid questions.


Anonymous said...

You can see how many people have been hart by the cut.You also many lives were screwed up by ntuc agents, the greedy and unscrupulous agents.

Anonymous said...

Adrain ,
answer to the reader , if you misjudge just apologies no big deal . i started to suspect your profession of being an insurance agent.

Khiat Han Hwee Adrian said...

I never want my blog to be associated NTUC Income since I started this blog nearly 16 months ago.

My purpose is to educate people about Health and Wealth. Its also a platform where I voice my views on Current Affairs and certain things that I observed. Its also my own personal blog where I can keep track of some memorable events that took place.

I do not want anything to do with Sales or products of the company.

You can say that I am still in NTUC Income, but its very grey now because I had already resigned from the company.

hello panda said...

Thanks Adrian for clarifying some of the doubts that's going around concerning the change of bonus scheme.

Here's what I understand from the FAQ found on the Income website:

Past: Higher annual bonus, much lower special bonus that is payable only after 20 years.

New: Lower annual bonus, much higher special bonus that is payable starting from the 2nd policy year.

If we are taking a short term perspective, now if we surrender our policy before Year 20, we can enjoy annual + special bonus which I believe is higher under the new scheme.

However, I agree that buying insurance is for medium to long term. Even that, we all know that investment returns are higher in the long run, though ya, there can be ups and downs in the market, the general trend is upwards. So having a lower annual bonus, can possibly give us higher special bonus in the future.

If we are looking out for guarantees, I say, fixed deposit is the way to go. But the rate got to be higher than inflation which is at its all time high.

Anonymous said...

Hello panda, like many out there you have been persuaded to beleive that your TOTAL bonus will higher. You didn't read that the combined will be the same. Which you prefer, get more now and get lesser later or get lesser and get more later. The later is not guaranteed. LIke Adrain illustation, lower salary and higher bonus which may not be given if things turn out bad.
Don't console yourself. This is an trick that insurers played again and again and surprisingly it still works. if you don't study history, history is doomed to repeat and this time is NTUC's turn.

Khiat Han Hwee Adrian said...

If you have a brother and an outsider tell you that your brother is stupid, rude, ugly and boorish. Will you totally agree with him when you see your brother day after day and never see such a trait in him?

Will you rebuke against that remark and proudly stand up and tell that it is not true? Does it mean that your opinion is bias because both of you belongs to the same family?

I agree that many may feel that my posting is bias, but I wrote what I sincerely feel about this issue.

Its a very unpopular decision and I don't think many will be happy about it but if they don't do it, will they be able to keep up the higher investment returns compared to all the other insurance companies in Singapore? If they eventually gives a lower maturity bonus than others, nobody will want to buy from NTUC Income too?

Anonymous said...

12.35AM talks like he knows so much, criticising about the actuary and all. Shows how ignorant his comments are, micro and shallow. How much does he actually know to comment? On 98% - what did you think happened to it? What do you know about how it was handled in the past vs now?

I don't think Income thinks the PH are suckers but you certainly have made yourself look like one.

marc said...

I think there is a serious need not to be personal and abusive with words when commenting. this is getting too emotional which is not rational and immature. you know who you are.

let's wait for the NTUC income management to speak up. it's only fair.

Anonymous said...

How can such a BIG CO-OPERATIVE live NTUC Income cheat people??? Won't they know that they will get into trouble?? Why would a new CEO want to make changes to spike himself and his policyholders?? Hmm, let me think.. because he wants to become popular and famous for doing the wrong things? Actually, I do pity him, he's getting so much of bad encouragment for trying to achieve something better for the future.

Anonymous said...

The new CEO was from purdential. Is he trying to bring over some of the best practice in the industry over to INCOME? such as Posh meeting place (Choosing Suntec The Rock vs previous Kreta Ayer Theatre), free paid trips (to hanoi), posh office (u know the reno)...but suddenly realise kitty not enough management crack their brain...Ah ha! Industry practice, boost terminal bonus, lower annual bonus lor!

What next industry practice? Vivo after fully paid for 10 yrs (or 20yrs), suddenly tell policy holder sorry, cannot sustain and according to industry practice (AIA), you have to continue pay premium for another 10 years! YippEEE another golden tap!

Anonymous said...

It is not fair to the organisation when they are constantly relating the expenses (for reno, incentive trips etc) to the bonus restructuring.

Each insurance company has their way to reward their top insurance advisers,change of meeting venues to accomodate a larger population to attend the meeting. As for posh office, i personally do not think it it so.. I have pass by the one at bras basah, it looks ordinary.. even the branch office at levl 1, though renovated, it just gives a new, clean image, but not posh..
The branch at AMK hub, if u ever have a chance to go see, is not posh either, it is ordinary compare with its neigbour - citibank and dbs.

Think those concerned could attend the AGM to understand the re-structuring of bonus rather than giving negative and unfair comments at this point of time..

Anonymous said...

Hope it is not another KFC case when peanuts are spilled and monkey throwing out golden tap and bathtub out from the 6th floor..
Worse ,it is found he is earning 3 times what Mr. TanKL earned. Maybe he will call it ground nuts or cashew nuts, slightly longer but curled.
Another plot ideal as soap opera

chang said...

Dear Adrain,
Yes. I don't know what I was buying in the past because it is NTUC income which I trusted.
With all this noise, my trust in NTUC icome has been totally destroyed. I would rather buy term insurance from any company not neccessry NTUC income.

Khiat Han Hwee Adrian said...

Don't lose trust with NTUC Income.
NTUC Income is still a trusted cooperative insurer under the care of TSC.

He took an unpopular decision for the future of NTUC Income. There are things that commoner like us do not know. Do attend the AGM on 30th May, 6pm if you are keen to find out more.

Anonymous said...

NTUC Income also cut bonus rates in 1997, 2001 and 2002 during the time when Tan Kin Lian was at the helm

We did not explain why.

What saddens me is how a veteran in the industry can tear apart what he has built, and leave many people hurt and confused

It is really sad. He is killing the industry he as a part of. I really do not understand his motive


Anonymous said...

S.b or sob , whatever your name , you are twisting facts to suit you and to slander him. Were the cuts happened in bad time or in good time? Were they restored?
The restructuring is a completely different issue all together. Your bonus cut and SUPPOSEDLY to be made up the future deprives policyholders of cash in the sort term and you may not get in the long term , the special bonus.
You understand what is " a bird in hand is worth than the many in the bush". NTcu should realise that the products with this bonus structure not good for your clients but the greedy agents are trafficking them
at the expense of the clients.

Anonymous said...

This shows that insurance should never mix with investment.

Anonymous said...

Do you think only NTUC Income restructure bonus only? Then you are wrong.
Point 10, 1st Paragraph, Last Row:
"In fact, in Singapore, most other life insurance companies have adopted this practice for many years."

This means all other insurance companies had done this long time ago lah.

Anonymous said...

I was buying more and more Income insurance mainly on trust as the other had abused it.

To me insurance is supposed to be a minimum risk investment, I don't earn much interest on the policies and they have very long break even point. This is so, I can take more risk somewhere else. I don't want Income to be too risky, I bought Income insurance to reduce risk not to increase it. So change of the bonus structure is a big thing to me, at the minimum I should be offered to stick to the mutually agreed old formula. To say "trust me" just show no professionalism here, more like a coffee thug banging on their chest. And those who can't acknowledge minimumly Income should offer a no-change option is plain dishonest. Twisting it further just show how twisted their logic or character are. And not offering it also show that Income is hiding something behind.

The impact is I shall re-examine all my insurance plans with Income, and shall unwind those that has high cost but low benefits. I cancel the ride-plan, and shall await another to do a big adjustments on other plans.

I think Income needs to be forthcoming if they had burnt away the money through any reckless investment in the crisis. The policy holders need assurance and reassurance now.

KiaSee said...

See my investigation into NTUC income expenses: