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Tuesday, April 29, 2008

NTUC Income Annual Bonus Cut - Is It Fair?

I personally does not have policies with NTUC Income but have been hearing news that they are cutting annual bonus despite posting a healthy over 10% gain in investment yield in year 2007. Policy holders are actually expecting an increase in bonus but instead, the cooperative does the opposite. As a cooperative, one must have thought "people" are always placed Number One but this time round, profit is placed as a higher priority.

Mr Tan Kin Lian, NTUC Income ex-CEO, has raised his concerns over the recent unexpected bonus changes. From NTUC Income, policy holders will be expecting a higher payout on maturity or death as they are increasing their special bonus. However, it is to note that special bonus is non-guaranteed and can be lowered to cover marketing expenses, overheads, or to increase higher profit at year end. A high investment yield in year 2007 has already resulted in a cut in annual bonus and who knows what will happen next year should investment yield in year 2008 were to end lower - which is quite likely given the current weak economic outlook.

Recently, NTUC has unveiled a whole new logo which I personally feel it unnecessary. NTUC is a cooperative and is a household brand name and there is no need to spend additional costs in a new logo design. A new logo is usually necessary for a profit driven corporate especially after a merger or acquisition. Not only additional cost has been spent on the new logo design, NTUC is also moving into more aggressive markerting, conducting roadshows to sell their policies. This is very different years ago.

An advice to existing NTUC Income policy holders is if you are not satisfied with the reason being provided as to why a cut in annual bonus is essential, you should question them how the dollar cut is being used. There should be more transparency isn't it? It's your money after all.

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