Retirement & Malaysians

Excerpt from The Star 22nd August 2009

Saturday August 22, 2009

Malaysians less confident about preparing for retirement


LOTS of working adults are paralysed when it comes to planning for retirement. Most people will delay this as long as they can, possibly due to their lack of knowledge about financial matters.

Generally, the more knowledgeable an individual, the more confident he is in taking control of his financial destiny, which usually is about securing a comfortable retirement.

A recent study by the non-profit Employee Benefit Research Institute in the United States found that only 13% of Americans said they were confident of a comfortable retirement – drastically reduced from 27% in 2007.

Figures in Malaysia show a similar sentiment. The AXA Life Outlook Index findings for 2009 indicate that Malaysians’ satisfaction with their preparation for retirement has dropped. In 2007, 23% were confident about their retirement years, but this has since dipped to 14%.

While many working Malaysians are reasonably financially literate, certain groups are less so and therefore less confident in managing their finances. This is a worry considering that the elderly make up an increasingly large proportion of our society.

Demographic and socio-economic forecasting provider Global Demographics Ltd forecasts senior citizens (those 50 years and above) to increase from 15% to 25% of the total Malaysian population over the next 20 years.

As the Malaysian population ages and retirement looms for many, the issue of financial literacy in a retirement planning context has become particularly salient.

Abacus for Money chief executive officer Carol Yip says that there is no single product or solution available to guarantee one’s comfortable retirement.

She notes that the main asset likely to be available to most working Malaysians upon their retirement is their Employees Provident Fund contribution.

Other assets may include property, shares, unit trusts, term deposits, inheritance, insurance, government pension as well as emerging private pension funds.

Yip asserts that individuals must increase their level of financial literacy so that they can go cherry-picking from the wide array of products available in order to ensure a comfortable retirement.

Besides the usual means of consulting financial planners and reading financial magazines to improve financial literacy, Yip calls upon employers to provide training to their staff in order to empower them with financial knowledge to plan their future.

Yip also encourages retirees who are in the early stage of retirement to equip themselves with financial knowledge in order to wisely invest their money so as to protect it from inflation as well as to provide recurring income over the medium term.

The senior citizen population of 50 and above in Malaysia as well as regionally is said to be rapidly expanding into a large, affluent market.

MasterCard Asia Pacific, in a study, estimates that the spending power of the retired population in Malaysia to exceed US$10bil (RM35bil) by 2015 – more than double the figure from 10 years before.

Madam Chong (not her real name), 56, who recently retired but is still an active investor with a moderate risk profile, was looking to diversify her portfolio.

The ideal product that she is looking for is one that can offer recurring income with double-digit returns annually, monthly or quarterly. It should also be capital-guaranteed as well as easy to liquidate with no penalties over five to ten years.

“I was prepared to consider regional investments with a slightly higher risk,” she says.

After looking around, she discovers that there are no such products that meet all her criteria except for two that offer returns between 6% and 7% per annum, but require high deposits of RM250,000.

“There are a couple of insurance companies that offer returns of about 4% annually with smaller deposits,” Chong says.

Given the current economic uncertainty and the absence of investment products specifically catering for retirees, Chong reiterates the need for retirees to be financially savvy instead of just depending on advice from third parties to manage their wealth.

Insurance claims on A (H1N1).

Excerpt from The Star, 21st August 2009

Friday August 21, 2009
DPM: Clarify if flu victims can make medical claims

PAGOH: Insurance companies will be asked to explain whether those infected with the A(H1N1) influenza can make claims for their medical expenses, said Deputy Prime Minister Tan Sri Muhyiddin Yassin.

This was necessary as the insurance companies were subjected to insurance laws and agreements with policy holders.

“I am not sure about the agreements which are usually in fine print,” he said, adding that it should be checked if the Influ-enza A(H1N1) fell under diseases not covered by the policy.

Muhyiddin said the insurance director-general should check on the matter and hold discussions with insurance companies.

He was asked to comment on reports that many insurance companies were declining medical claims submitted by those infected with the disease.

Health Minister Datuk Seri Liow Tiong Lai also urged insurance companies to include death due to A(H1N1) infection in insurance policies for their clients regardless of whether they were new or old policy holders.

He urged insurance companies to do the same for medical treatment for cases relating to the virus, adding that demand for health insurance will increase because of the pandemic.


Excerpt from The Star, 15th August 2009

Saturday August 15, 2009

Protect yourself and your liabilities

Comment by TAY HAN CHONG

PAYING yourself first will ensure that there is savings, but that may not be sufficient. Sure, it provides the resources for one to better plan for the future but on its own, savings is very low yielding though it is liquid and “safe”.

Just like having a good workout physically, we cannot kickstart from a sedentary lifestyle straight to running a marathon. It takes a bit of building up before one can reach a certain level of fitness.

My father-in-law is a personification of “good life”, in the traditional Chinese sense. After sustaining a spinal injury at work, he swapped roles with my mother-in-law and became the stay-home dad. He kept himself active for 20 years looking after the home, his girls and ailing mother. However with the daughters grown up and married, his lifestyle has gone from active to sedentary. Unfortunately, his appetite remains hearty despite attempts to change his eating habits, and naturally his weight has piled on.

As luck would have it, he had problems with his insurance application earlier this year and through the urging (and nagging) of his wife and daughters he became determined to re-gain his fitness. Being a proud man, he rejected help from my wife’s ex-personal trainer. However, in his eagerness he pushed himself too hard physically and injured his bad back and shoulders as well. The next three months was thus spent undergoing physiotherapy.

Two lessons from this – (1) Age issue aside, he did not gradually build up his foundation before attempting more advance and strenuous exercise, thus straining himself. And (2) Don’t wait till it’s too late to get started.

Financial or money workout is not any different. I am encouraged to move beyond savings, the core focus of my money workout #1 – paying yourself first, to other aspects of money workout to provide a full spectrum of financial advice.

So to build a good foundation of financial strength, I shall start from protection. Protection is, in my mind, the basic level of wealth management. This is even before one embarks on investing to grow one’s wealth. Let’s start with a cliché – it is not about someone dying, it is about their loved ones continuing on with their lives.

Many people do not know what policies or coverage they have. Some don’t even bother to insure themselves because they think insurance is a waste of money! And to dismiss all the constant hounding from insurance agents, we have even perfected the script “got enough insurance already la” which rolls off our tongues without batting an eyelid. Many a times, we convinced ourselves so well that we really don’t know otherwise.

It is all about contingencies and with life’s uncertain twists and turns, who is to know what might happen? It is therefore important to ensure that we have adequate protection as it provides peace of mind knowing that if anything were to happen, our loved ones will not be left out in the cold.

When should one buy insurance? One should and could only buy insurance when one doesn’t need it, yet! When you need insurance, you will not be able to purchase it anymore. Pre-exisiting conditions are normally excluded from coverage. So today is the best day to start, protection planning is all about meeting contingencies. It’s everything about living too long, dying too young, or living with impaired health.

Here’s my guide: Money Workout #2 – Protect Yourself. How do we start?

Life coverage is about providing for loved ones in case of death or total permanent disability. How much life coverage is sufficient? I don’t subscribe to the rule of thumb that some insurance salespeople use to frighten you with – that is for coverage to be about 10 years of one’s income. It probably would be closer to 5 years of one’s expenditure (and not income). Hopefully after 5 years, the family would have adjusted to the loss and re-established their lifestyle without the deceased.

More often than not, the insurance provides for 5 years while other forms of savings and investments can also provide for a few more years of expense. If more coverage is needed, it might be boosted based on one’s ability to pay the additional premium or, alternatively consider term insurance. So if you spend RM5,000 a month or RM60,000 per year, the suggested minimum life insurance is RM300,000. There is no such thing as too much coverage, but there is the minimum amount that would be considered sufficient.

Critical Illness is about living with impaired heath. A definite must-have is critical illness rider to life insurance which usually covers the common illnesses such as heart attack, stroke and diabetes. When one is suffering from such critical illnesses, it is already tough on the family particularly if one is also the bread winner. Not to mention the sudden spike in medical costs which can increase the normal monthly expenses by many folds. Generally, I would imagine that the minimum amount needed would be in the range of RM300,000-RM500,000, especially if you take into consideration long-drawn illnesses such as kidney failure or a heart attack that may result in impaired health (and perhaps loss of income and job).

While on the topic insurance, I shall quickly jump into Money Workout #3 – Protect against your liabilities. This is about protecting yourself against outstanding liabilities, should anything happen to you. While we may provide for our loved ones, sometimes we forget that we have debts and liabilities which would be transferred to our loved ones as well. In this case, I provide one clear cut example.

Liabilities are what we owe others. And usually the largest debt that one has is the mortgage. And since most people have only one house, the mortgage is usually on the house that we call home. So it is important to make sure that if anything should happen to you, your biggest liability is totally paid off to avoid the burden on the family. Generally as our debts are repaid, this liability also falls over time, so the protection needs to be reducing in coverage over time. The bottom line is to have insurance that matches one’s liability closely. In this aspect, more is not necessary but less would be a burden.

Buying an insurance can be a taboo for some, since many tend to believe mishaps happen only to “others”. But a joke I came across smacks of reality: Needing insurance is like needing a parachute. If it wasn’t there the first time, chances are you won’t be needing it again.

I consider insurance to be the foundation of one’s overall financial wellness, even before embarking on investing. This provides a peace of mind for you and your family. Just look at the faces of your children and you will know that you must build this foundation well. Once done, and the remaining money can be better used to make more money, provided you have the risk appetite.

Tay Han Chong is senior vice-president and senior head of UOB’s personal financial services division


Excerpt from The Star, 9th August 2009

Sunday August 9, 2009
Money talks in cancer

A breast cancer survivor reveals its painful burden on family resources and how having health insurance saved her life.

YOU’VE just been diagnosed with cancer, and the doctor is discussing treatment options. Should cost be a deciding factor?

The prices can be staggering. Consider this scenario: There are two equally effective options to battle cancer, the kind spreading through the body – but one costs RM$60,000 more than the other.

One in eight people with advanced cancer turns down recommended care because of the cost, according to a new analysis from Thomson Reuters, which provides news and business information. Among patients with annual incomes under RM$40,000, one in four in advanced stages of the disease refuse treatment. Do they pay out of their own pockets, sometimes in the thousands of ringgit? Or do they forgo the therapy to preserve what modest assets they may have for their families’ futures?

Cancer care is expensive.

My first encounter with cancer was when my dad was diagnosed with stomach cancer in 1998. Our battle lasted six months before he succumbed to it. But our financial woes lingered long after that.

Dad was a 70-year old pensioner when he was diagnosed with advanced stomach cancer. It was a dreadful disease to have. Upon his diagnosis, we were determined to give him the best medical care possible and do everything we possibly could.

It was a big commitment, and we soon realised that our means to fulfill that commitment were rather limited. The six months after diagnosis was a very trying period for all of us. In those six dark months, all our savings were depleted and credit cards used to the maximum.

I still remember it as though it were yesterday. My family and I were gathered in uncomfortable chairs in the gloomy hospital lounge. It was late in the evening and we were at our wit’s end. Dad had a terrible two days of pain and the doctors informed us that we were fighting a losing battle. “Take him home,” they said, “you’re wasting your money.” We were physically tired, emotionally drained, and financially exhausted.

We had by then exhausted our resources. Yet we were unwilling to take him home ... it sounded so final. We hoped, in his last days, to keep him as comfortable as possible. How were we going to proceed? Our bank accounts were dry and credit cards used to the limit.

We considered many options – mortgaging the house, applying for personal loans, borrowing some money from friends and relatives….

We decided the next morning we were going to do something about it.

But the next morning, dad passed away. It was as though he knew that we had reached the end of our resources. It took us a few years after that to emerge from the financial crisis that the cancer had caused.

We had overlooked and underestimated the financial burden of cancer and its impact on my dad, the patient, and us, the family. An individual does not face cancer alone, a family does. My dad’s stomach cancer had cost him his life. We all miss him dearly. At the same time, the cancer had cost us a substantial amount of money, for my dad did not possess a health insurance or medical policy.

Having witnessed our struggles, my church member, an insurance agent, got our whole family insured. And what a blessing it was.

In 2008, I was in Wellington, New Zealand, working on my doctoral thesis when I was diagnosed with aggressive, advanced breast cancer after a needle core biopsy. Having discussed my options with the breast consultant over there, I decided to return home for treatment.

All the bad memories of the dark moments we had battling with my father’s stomach cancer came rushing back. I remembered the physical fatigue, emotional pain, and the financial drain cancer can cause. I shuddered. It took us so long to climb out of the financial hole cancer had caused and now I was being sucked into it again. I knew financial cancer could mentally kill me faster than breast cancer.

Being a civil servant, I first explored my treatment options in our public hospitals. Because of the large number of patients they were already servicing, I was put on a three-month waiting list. As I explored other avenues, the deciding factor for treatment was cost. Each doctor discussed my treatment options and the cost. It was a grim picture they painted.

By now I was feeling so lost and overwhelmed. I couldn’t think. My family was frantic.

I felt like I was drowning. I was lucky; I had a cushion to fall back on. My health insurance came to the rescue. My medical card enabled me to get prompt treatment, which is an important factor in fighting cancer. My medical card gave me the freedom to find the best doctors and best treatment available in town. My medical card helped save my life.
I soon discovered that there is much more to the cost of treatment than hospital, physician, and medication bills. Out-of-pocket expenses for transportation, food supplements, over-the-counter medications, distractions, telephone bills, complementary medicines, and many other hidden costs can be a significant drain on finances. The total financial damage came close to RM80,000. Because my medical card absorbed the bulk of the cost that was incurred during the treatment, the out-of-pocket expenses were more manageable.

I am so very thankful to my insurance agent who got me insured. Because of my medical card,

I could focus on getting better and not waste my energy worrying about finances and the astronomically expensive treatment.

Having triumphed over my cancer, I truly believe that God, and my dad, are watching out for me. They are doing that through the blessings of family, friends, my doctors, and most importantly, health insurance.

For further information, e-mail The views expressed are those of the writer and readers are advised to always consult expert advice before undertaking any changes to their lifestyles. The Star does not give any warranty on accuracy, completeness, functionality, usefulness or other assurances as to the content appearing in this column. The Star disclaims all responsibility for any losses, damage to property or personal injury suffered directly or indirectly from reliance on such information.

A(H1N1): Lets Be Serious - 26 Deaths

Excerpt from The Star. 9th August 2009

Published: Sunday August 9, 2009 MYT 1:38:00 PM

A(H1N1): Eight more deaths reported

KOTA KINABALU: The number of deaths from Influenza A (H1N1) virus rose to 26 nationwide on Sunday with the Health Ministry confirming that eight more people have died from the deadly virus.

Health Minister Datuk Seri Liow Tiong Lai said the deaths, which between Aug 3 to 8, were confirmed to have resulted from the deadly virus following test results. (One person died on Aug 3, two on Aug 5, four on Aug 6 and the last one on Aug 8)

He said the latest eight deaths involved mainly people in the high risk group though there was one 20-year-old college student who was found dead at her hostel about a week after obtaining outpatient treatment at a hospital.

Among the dead are two Sabahans - a 24-year-old obese woman from Ranau who died of pulmonary oedema after a bout of flu and fever while the other involved a 74-year-old man with a history of heart problem who died of pneumonia and pulmonary oedema.

The others deaths were a 47-year-old patient with asthma in Sarawak and a 37-year-old obese male who died of broncho-pneumonia at the hospital in Johor Baru.

Liow said as at Sunday, there were a total of 62 patients warded in hospitals with 13 in the intensive care units, while an additional five were waiting for test results. The Health Minister also said that in Sabah, 402 confirmed cases had been detected, with seven patients still in hospital and one in ICU.

He said 35 schools had also been closed to date.