EPF Revise Quantum Savings

The Employees Provident Fund (EPF) has announced that the quantum for the basic savings will be revised from RM196,800 to RM228,000 effective Jan 1, 2017.

The amount will be set as the minimum target EPF savings members should have when they reach age 55, it said in a statement here today. The basic savings refer to the amount that is considered sufficient to support members’ basic retirement needs for 20 years from age 55 to 75 aligned with the Malaysian life expectancy.

The new quantum is benchmarked against the minimum pension for public sector employees, which has been raised from RM820 to RM950 per month from age 55 to 75.

“The EPF basic savings quantum is revised periodically according to the minimum pension for public sector employees, or every three years, whichever is earlier, with the last revision having taken effect in 2014,” said Head of Corporate Affairs Department, Nurini Kassim.

In view of the escalating cost of living, longer life expectancy and higher inflation rate, the EPF has made the decision to revise the basic savings upwards to RM228,000 from RM196,800.

“Accordingly, members will now be required to have higher savings in their EPF accounts in order to be eligible to participate in the EPF Members Investment Scheme (EPF-MIS),” she said.

The scheme provides members with an option to enhance their retirement savings through placing a portion of their EPF savings in Account 1 to be invested in unit trust funds or via private mandate managed by the appointed Fund Managers Institutions (FMI) under the EPF-MIS.

Nurini added that the basic savings will be used as a guide for members to determine the amount permitted to be transferred for investment under the scheme.

Effective Jan 1, 2017, the eligible amount members will be allowed to invest under the EPF-MIS has been increased to up to 30 per cent in excess of their basic savings from Account 1, from the current 20 per cent.

“Before participating in the scheme, EPF members should read the prospectus and disclosure documents to fully understand the investment product and should consult professional financial advisers.

“Members with i-Akaun can also refer to the EPF-MIS Information Portal for details on unit trust funds offered under the scheme, as well as the FMIs managing these unit trust funds,” said Nurini.

Pressure On Banks - Malaysia

Malaysian lenders are bracing for a hit to profits this year as they bump up provisions for sour loans to the local oil and gas (O&G) services sector that has been battered by the slump in energy prices and cutbacks in projects.

The problem mirrors pain playing out in neighbouring Singapore, where the collapse of oilfield services firm Swiber Holdings Ltd has stoked concerns about the size of the city state’s biggest lender DBS Group Holdings’ exposure to the industry.

Last month, Malaysia's Perisai Petroleum Teknologi, an offshore oil and gas services provider, said it was aiming to renegotiate terms with bondholders on a S$125 million (US$92 million) bond.

A day later, Malaysia’s biggest bank Malayan Banking Bhd (Maybank) reported a tripling in loan provisions that was partly responsible for a 27 percent decline in second-quarter net profit - further fanning concern about the sector.

“While Malaysian O&G names are in a relatively better liquidity situation than their Singapore peers, we expect this to continue to remain an issue for these banks due to the volatility in oil prices,” said Nomura analyst Tushar Mohata.

But analysts also note that while Malaysian banks’ have some US$10 billion in exposure to the oil and gas sector overall, this represented just 3 percent of their gross loans as of June.

On an individual basis too, Maybank and rivals CIMB Group Holdings Bhd and RHB Bank Bhd all have 3-4 percent of their total loans in the oil and gas sector.

By contrast, loans to the sector accounted for about 6 percent of total loans at Singapore’s three listed banks. DBS has some US$17 billion in exposure to the sector, Maybank has just US$4.6 billion.

“We expect the impact on profits to be manageable. Despite increased stress over the last few years... banks’ revenues have been sufficient to absorb the higher impairment costs and profitability has remained adequate,” said Elaine Koh, a director at Fitch Ratings.

Since Maybank reported results last month, 13 analysts have cut their predictions for annual net profit forecast to an average RM6.15 billion, a decline of about 10 percent from last year and 6.6 percent lower than earlier estimates.

Still, chances are more loans to the sector are likely to go sour, particularly if oil prices, which have slumped 60 percent over the past two years, do not see a significant pick-up.

A planned cost cutting drive by state oil firm Petroliam Nasional Bhd (Petronas) of up to US$12 billion over four years is also set to exacerbate woes.

UOB KayHian analysts have highlighted several offshore services firms as having risky gearing levels. These included UMW Oil & Gas, which it said had maturing short-term loans worth RM2 billion, as well as Dayang Enterprise Holdings Bhd.

UMW declined to comment. Dayang said the firm has enough cash to comfortably ride through the next two years.

“Indeed, we have a few sizeable loans but none are due in the next one year, and we have also not defaulted on any loans so far. We will still be able to sustain the company even if operations stops,” Bailey Kho, head of corporate affairs at Dayang.

Standing-up To Bullying

Remember that anyone can be a bully – man or woman, manager or junior – although statistically bullies are most likely to be male and in a managerial position. No matter what form the bullying takes it can be very distressing for the victim, so it is something that should be sorted out immediately. Here’s how to deal with bullying in the workplace – we start with defining what exactly is meant by ‘bullying’.

What is Bullying - Bullying can take a huge number of guises but it’s generally seen as any attempt to undermine, control or upset someone. It is not usually an isolated incident – bullying tends to result in a sustained period of abuse and can damage your self-confidence and self-worth. There is no set circumstance that defines bullying, and it’s usually the case that if you feel that you are being bullied, you probably are.

Some common examples include:

• Directing physical or verbal abuse at you
• Making fun of you
• Undervaluing your work and effort
• Humiliating you in front of others
• Constantly criticising you unfairly
• Ridiculing your ideas
• Leaving you out of social situations

This list is by no means exhaustive and often bullying will involve many different behaviors. It’s also true that some bullies may not realize their actions are hurtful and may see them as a natural part of the work environment. But it is important to remember that they are not and it is your right to work without being bullied.

Don’t ignore the situation - The first thing to note is that you should simply try to ignore the situation and hope that it will go away. If you do not confront the bully or take action to make them stop their behavior, they will assume that what they are doing is acceptable – this is essentially giving them more power. If you feel you are being bullied it is often necessary to come up with a plan to deal with the situation. The longer that you feel as if you are a ‘victim’ the more challenging it will be to overcome the problem, so act as soon as possible.

Don’t get emotional - Allowing your emotions to get the better of you is unlikely to do any good in the situation. Getting upset or angry will show the bully that they have power of your emotions and it will most likely make them continue their behavior. When bullying occurs or when you are trying to deal with it, do you best to stay calm no matter what is said. Not reacting to a bully’s treatment may even show them that they have no power over you, but this won’t be enough to stop the behavior in all situations.

Make someone else aware - One of the best things that you can do if you are being bullied is to make other people aware of the behavior; this could be your manager or a co-worker. Not only will this mean that you will have someone to support you but it also means that you may have a witness to the behavior that occurs. When you have supportive people around you, it can make it easier to overcome the bullying.

Document the behavior - It’s important that you should document all of the bullying behavior – including what happened, when it happened and who witnessed it. This will be extremely valuable later on if you decide to take the problem to management, HR or even further.

Seek help and advice - Depending on the situation it may be possible to confront the bully and let them know that their behavior is inappropriate and unacceptable. But for some workers this is simply not possible due to the circumstances of the bullying. In any case you should seek advice from your manager and then your HR department. When bullying becomes a serious problem in the workplace it can be necessary for management to get involved to resolve the situation.

Take legal action - If your attempts to deal with the bullying through the company are not taken seriously or are ineffective then it could be worth seeking legal action. If the bully is breaking the code of conduct or contravening working rights, it is possible to take legal action against your company for failing to deal with the situation properly. You should seek advice from a solicitor experienced in dealing with these kinds of cases.

Bonus In Life Insurance

1. A bonus is declared out of the valuation surplus of a life insurance fund, that is, the excess amount left in the fund after the insurer's requirements have been met. 

2. Only 'participating' or 'with profit' policy holders are eligible for the bonus declared. The bonus varies across plans. 

3. A simple revisionary bonus is declared and added to the sum assured of the insured.

4 . A compounded revisionary bonus is calculated as a percentage of the sum assured including any past bonuses declared. 

5. Terminal bonus is paid once in the life of the policy, when the policy has been in force for a long time. 

6. Interim bonus is paid to compensate for policies that were in force at the time the valuation was made but became claims before the bonus was declared and paid. 

Home Mortgage Insurance

If you’re buying your first home, or moving into a different one or negotiating a new mortgage, you will probably be asked if you want to purchase mortgage insurance so that your mortgage will get paid in case you or your spouse dies. Many Canadians do buy this insurance, which is typically offered by the mortgage lender. But is mortgage insurance really such a good idea, or is there an alternative?

Actually, you do have another option: individual life insurance. And when you purchase life insurance to protect your mortgage, you can gain some key advantages over mortgage insurance. Here are a few to consider:

Flexibility — If you purchase mortgage insurance, the lender is the beneficiary. But when you own a life insurance policy, you get to choose the beneficiary, so you can name your spouse — and, quite frankly, he or she may need the money more than the mortgage company. Once your surviving spouse receives the tax-free death benefit, he or she can use the money for any purpose, including paying off the mortgage or replacing lost income. In fact, life insurance can be customized to meet your specific needs.
Portability — If you move, or move your mortgage, your mortgage insurance ends, and if you want new mortgage insurance for your next home, you may need to requalify. This might involve higher rates, or you could be declined or denied coverage. But your life insurance policy is “portable,” which means it goes where you go.

No loss in value of coverage — Over time, you’ll pay down the amount of money you owe on your mortgage, but your premiums will not decrease, so, in effect, your mortgage insurance will become increasingly expensive. However, your life insurance premiums pay for the same amount of insurance for the entire life of the policy.

Ultimately, the key difference between mortgage insurance and life insurance is that mortgage insurance covers a debt, while life insurance protects a person. And since people are more valuable than debts, you can infer that life insurance is more valuable than mortgage insurance. So the next time you’re considering purchasing a home or changing your mortgage, give careful thought to using life insurance to protect your mortgage — and a whole lot more.

Live Longer Pressure on Life Premium

Retirees and near-retirees are often at a loss about what to do when faced with unexpected premium increases in life insurance and other forms of insurance. One of the challenges that financial advisers face when meeting with clients for financial planning near their retirement is that many clients can no longer afford their insurance policies. Escalating costs for long-term care insurance, medical expenses and life insurance are a threat to fixed-income retirees and near-retirees considering the cost of retirement.

According to the American Association for Long-Term Care Insurance (AALTCI), the average cost of a long-term care insurance policy on a 55-year-old individual in standard health is $2,065 per year. Multiple reports state that significant policy premium increases can be expected over the next several years across the U.S. Many long-term care insurance policy owners, who were already paying above average premiums, were surprised to learn earlier this year that their renewal rates will exceed $8,000 per year. This is a staggering increase, as much as 130% in some cases.

Much of the disparity in costs between expiring rates and renewal rates for long-term care insurance stems from many policies being priced wrong in the 1980s and 1990s. Insurance carriers did not collect enough money in premium payments to cover the expenses and assumed that policy owners would simply drop coverage over time. Another factor impacting the cost of long-term care insurance coverage is that people are living longer than ever. According to the Center for Disease Control, the number of Americans living past age 100 increased by 44% from 2010 to 2014. Securing long-term care insurance at age 60 may mean up to 40 years or longer in premium payments.

Bangkok Life & PT ACA Enters Cambodia

Bangkok Life Assurance expects to offer life insurance policies in Cambodia by the beginning of next year, according to Thai news outlets, adding to the list of international insurers looking to tap into the Kingdom’s nascent but potentially lucrative market.

The Cambodian government granted the Thai-based insurer a licence earlier this year, giving it a green light to set up a joint venture subsidiary in Cambodia with $7 million in registered capital, the reports said.

Bangkok Life holds a controlling stake in the new venture with 52 percent of shares, according to a company release. Indonesia-based PT Asuranci Central Asia holds a 25 percent stake, while Bangkok Insurance Plc owns 15 percent of shares and Asia Financial controls the remaining 8 percent.

Bangkok Life is Thailand’s sixth-biggest life insurer in terms of market share. The company joins Japan’s Dai Ichi Life and rival Thai insurer Muang Thai Life, who announced plans earlier this year to open offices and start operations in the Kingdom.

Four life insurance companies currently operate in the country, where the total premium was $18.5 million during the first half of the year, according to the Insurance Association of Cambodia (IAC).

“Everyone is focusing on spreading awareness and as the insurance companies continue to do that, more and more people will be interested in these products,” IAC chairman Huy Vatharo said yesterday.

Vatharo expects the country’s life insurance market will see continued growth as both incomes and knowledge of life insurance increase in the Kingdom.

He was confident that there was still room for new players in the local market.

“The Cambodian economy is still growing and the middle class is getting bigger, which means the market is growing for life insurance,” he said. “There is a big opportunity for growth and newcomers will keep trying harder to get a market share by educating the market about their products.”