Tuesday, August 25, 2009

Analogy - there are no poor people in Singapore

There is a debate in the Straits Times Forum about the existence of "orphaned money" in the participating fund of a life insurance company.

In my letter, I gave an example of a life insurance fund with assets of $15 billion and liabilities of $13 million (calculated from the individual liabilities of all individual policies), leaving "orphaned money" of $2 billion.

The reply of the Monetary Authority of Singapore, Life Insurance Association and Singapore Actuarial Society, is that under the law, all money in the participating fund belongs to the participating policyholders, hence the question of "orphaned money" does not arise.

This is similar to the argument that as Singapore is a wealthy nation, and as all the wealth of the state belongs to the people, there are no poor people in Singapore. Tell that to the people who cannot pay their electricity bill or buy food.


Anonymous said...

You commented:

"This is similar to the argument that as Singapore is a wealthy nation, and as all the wealth of the state belongs to the people, there are no poor people in Singapore. Tell that to the people who cannot pay their electricity bill or buy food."

Don't think that's a fair comment to make. MAS, LIA & SAS only talked about ownership of the estate. They did not suggesting that there is equal access to the pot on demand. Isn't how all nations work? Can you imagine if all countries in the world return all the state's funds to the citizen's bank account? If the Minibond saga gives an indication about how savvy Singaporeans are in managing their money (overly trusting of salesman, lazy to shop around for the best deal, not penalising poor commission structure promptly), we are not helping Singaporeans if we were to return large sums of the state's funds to the people.

I still think the better way is to nationlise core insurance and investment management for the people. Enhancing MediShield basic is good because people get better coverage without fattening the pockets of insurance agents and insurance companies. CPFLife is way better than any annuity plan offered by the insurers. And look at how much loss people have suffered when they are enticed by sales people to take their CPF money out to invest in CPFIS before 1 Apr last year. They would be better off leaving their money in their CPF. I am not complaining about the 2.5%/4% I get on my CPF-OA/SA.


Anonymous said...

Mr Tan:

The point raised at your paragraph 3 appears exactly the perception of MAS and the Life Insurance Association. If I am not wrong, you are talking about a practical problem that need be looked into and resolved to protect the policyholders, but they are telling you there is existence of law in this respect and as if the practical problem can be resolved automatically because of the existence of law.

Does this perception stand? If it does, there is no policemen required to protect the citizens from being swindled, robbed, murdered etc as the law does not allow such crimes to happen.

The existence of law and its enforcement are two different but related aspects of a matter. The law not being enforced and closely monitored for its enforcement is tantamount to no law

Has MAS initiated action to ensure enforcement of the laws, regulations promulgated ? I doubt.

Richard Koh

Anonymous said...

I totally agree with you Mr. Tan.

When I saw the MAS reply in the newspaper, I fell off my chair laughing at the logic they used.

Anonymous said...

All the poor people are taken off the streets and placed elsewhere. Face is very important in Singapore, any thing ulgy has to be hidden from sight, especially from foreign eyes. Even the plight of a Malay man who was penniless and homeless and had been living on the beaches in Changi are taken away. This is Singapore, prosperity and calm on the surface only.

Anonymous said...

Haha...this is very true. Just because the country is rich, that does'nt means there's no poor in Singapore. A fine example is the CPF. Just because you have lots of money in there, it does'nt mean you can touch it!!!

Anonymous said...

I copied it from a taxi driver dairy blog. It is hot topic now how could a Standford PHD drive taxi in Singpore. It looks that Signapore goverment never admitted any mistake. have you heard any one? No perfect people, but we have perfect goverment with perfet policy.

*I would like to talk a bit more about A*STAR.

In general many managers in A*STAR RIs are really bad, only spending public money for their own personal benefits. Politics and unfair stories are everywhere. Many true talents have simply chosen to leave. Exactly as one reader pointed out, quite some managers just want to 'manage' and it is true that the only thing they "can" do is "management". But in reality, manager is in no way a admin job, but an academic leader, just like Dr Cai. Here comes the problem: these guys -- very likely having academic background -- have never excelled in their field and are in no way capable of LEADING research. Many of my former colleagues are now aware that the situation will only become worse. A*STAR scholars are coming back. They will be quickly promoted to management positions without really establishing themselves in research. A friend of mine is an diligent and intelligent guy well known outside in his domain for his capacity. But after working 10 years in a RI he is never promoted but stayed a research engineer (lowest in a RI). His group leader is a young guy whose conference publications are less than my friend's quality journal publications. But this young man allowed himself to give orders to do non-sense work and even required to have his name in a book co-authored by my friend! Bravo, bold guy! My friend finally decided to take a professor position overseas.

Another thing that some mentioned is the mindset rooted in gouvernment officials' head: they look up to Westerners and down on their "yellow" administered. I spent about 10 years in a RI and I can tell most honestly in the world that we have never been consulted on the what we feel by the direction, whereas in reality as researchers we know better what is not going well. They trust only outsider like SAB (Scientific Advisory Board), paid high and come only 1 week per year. Anecdote here. One time the SAB members decided to interview researchers in private to dig some nude truth. Just before they started, we were assembled and told how to answer the questions of the SAB members and what not to say. Yes, cheating is a general rule in A*STAR RIs. People might remember the EduPad, a tablet PC intended to replace schoolbag and pencils, developed by ITI (later merged into KRDL), during the period of Teo Chee Chien at MOE. If my memory is good, in total 20 million S$ were spent and final result is a useless device. But nobody is responsible for this and nobody cares the least. On the contrary, managers got promoted by inventing tales. There are many many similar stories.

As a Singaporean born in China, I feel very sad to see that every year billions of dollars are just wasted and the atmosphere poisoned in the RIs.

It is high time that the Singapore government have a thorough check of the A*STAR RIs, starting from the A*STAR management itself! The current mess in RIs is largely due to the incapacity of A*STAR. I really hope that one day A*STAR RIs become a pool for training high-level R&D engineers and a pillar to support Singapore industries. Only in this way, taxpayers money is spent for value but not wasted.

Very best wishes to Singapore, my new home.


Anonymous said...

TMG 10.13am

"I am not complaining about the 2.5%/4% I get on my CPF-OA/SA."

No more 4% from next year. More likely become 2.58% if current 10 year Treasury bill yield persist into next year and beyond.

CPF LIfe, although pay for life, does not guarantee payment. Also payment can be very low even for huge miminum sum, depending on the "prevailing conditions".

So maybe a choice (or is there a choice?) between lesser of 2 evils.

Anonymous said...

Something is fishy on the issue of "orphaned money".

Many of us simply do not know what is the reasonable payout that we should receive when an insurance policy matures or being terminated. We just accept whatever is given to us.


Anonymous said...

Don't worry. 2.58% + i% =3.58 is still better than all the insurance companies. What if it is 4%+1%?.. The worse is 2.5%+1%=3.5% and it is still better than any insurer. Get it? 2.5% is the floor rate and won't go any lower.It is the best of the evils. So don't be conned by insurance agents who will tell you otherwise and lies that benefit them. You know which company I am referring to, don't you?

Anonymous said...

Similarly, "THERE IS NO VICTIM FOR STRUCTURED NOTES". We have the MAS, the 3-step approach, the FiDrec, and the press is reporting good stories about. There is no problem in Singapore.

Anonymous said...

There is also no loan sharks in S'pore becos the law has passed to prosecute those who borrow $$ from loan sharks?

I better quickly change line to be a loan shark now may be a full-time one is better?

Anonymous said...

MAS reply is typical of those gahmen departments. They choose the path of least resistance in their replies, sometimes even sound naive, obvious or silly as a result, by avoiding obstacles or tackling it head-on. And for that they are very well rewarded! Really a very enviable job!

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