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BBCWatcher

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Overseas Work? Surprise, You Might Qualify for a National Pension!

Not too long ago I was chatting with an associate who happens to be a Singaporean citizen living in Singapore. He’s working now in Singapore and spent most of his career so far working in Singapore, but he did spend some time working overseas, including in the United States.

“You should see whether you qualify for U.S. Social Security retirement benefits. And whether your spouse qualifies for spousal benefits, too.”

Really? Yes, really! These details are worth checking, and you might be surprised. It turns out he does qualify, so he’ll have a future U.S. dollar retirement income stream from the U.S. Social Security Administration. It won’t be a huge one — on the order of a couple or few hundred U.S. dollars (in 2020 dollars), but of course that’s way better than the zero he assumed.

Many countries have social insurance systems and often require all workers, including visiting foreign workers, to pay into them. They also typically require a minimum number/size of contributions to qualify for benefits, such as retirement benefits. However, many also have social security treaties with other countries that provide for “totalization,” meaning that each system can count contributions to treaty systems in order to total up to the minimum contributions to qualify for benefits. There are other variations, including contribution refunds when foreign workers leave (careful, that might not be wise), spousal and even ex-spousal benefits, inflation adjustments in payouts, international transfer of pension payments to foreign banks, etc.

So let’s consider a hypothetical example: Jackie Tan (no relation to anybody with that name), a citizen of Singapore working and living in Singapore. She is currently 55 years old, and she is a senior risk officer at a bank in Singapore where she has worked for 30 years and counting, mostly in Singapore. However, her company sent her to work overseas on three occasions:

1. In the year 2000, she went to the bank’s New York office. She started working there in November, 2000, and planned to work there for 2 years (until November, 2002). However, the 9/11 terrorist attacks happened, and her bank ended up recalling her to Singapore. She left in February, 2002. She earned about US$80,000 per year annualized, and she was paid twice per month from November 1, 2001, through the end of February, 2002.

2. She ended up with another stint in the U.S., this time in Charlotte, North Carolina. She worked in Charlotte from October, 2010, through March, 2013 — about 2 1/2 years. She averaged US$150,000/year of income.

3. From March, 2015, through March, 2018, she worked in Paris. While there she met the love of her life, a Japanese lady. They married in Paris. Jackie and her Japanese wife moved back to Singapore, her wife on an Employment Pass.

In all these postings Jackie contributed to the social insurance systems in the U.S. and in France. Guess what? Jackie qualifies at least for U.S. Social Security retirement benefits and may also qualify for benefits from the French system. She has 7 years (in the way the U.S. counts) — 28 “credits” — of U.S. Social Security contributions. The U.S. has a social security totalization agreement with France, and so the U.S. Social Security Administration can get her up to the minimum 40 credits required to qualify for a U.S. national pension based on her French contributions.

Moreover, Jackie’s wife, who has never worked in the U.S., qualifies for a U.S. spousal benefit. This is typically 50% of Jackie’s monthly pension. If Jackie should predecease her wife, Jackie’s wife can then end her spousal benefit and switch to Jackie’s pension amount (100%). Spousal qualification rules are a bit more complicated since they can depend on residence and citizenship factors, but in this hypothetical example Jackie’s wife should qualify. She might even still qualify if they separate or divorce, and no, it doesn’t matter that Singapore doesn’t recognize the marriage. The U.S. (and France) do, and that works for these purposes.

These factors can and probably should influence your career decisions, especially if you’re close to qualifying for a benefit from some country or countries. Good luck!
 
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celtosaxon

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I wouldn’t count on the U.S. recognizing that forever. It is quite certain now that judge Barrett will be confirmed.
 

BBCWatcher

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I wouldn’t count on the U.S. recognizing that forever. It is quite certain now that judge Barrett will be confirmed.
Forever is a long time, and the next Tweet might change the world, but I doubt same sex marriage recognition will be reversed. And for U.S. Social Security it’d have to be a reversal all the way back to pre-United States v. Windsor. I don’t think there are even 5 votes in a Barrett-installed Supreme Court for reversal (cf. Marisa v. Pavan), never mind a President and Congress that would tolerate a reversal for long. It’s much more likely to be strengthened legally, and as soon as 2021, via the proposed Equality Act.
 

celtosaxon

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Forever is a long time, and the next Tweet might change the world, but I doubt same sex marriage recognition will be reversed. And for U.S. Social Security it’d have to be a reversal all the way back to pre-United States v. Windsor. I don’t think there are even 5 votes in a Barrett-installed Supreme Court for reversal (cf. Marisa v. Pavan), never mind a President and Congress that would tolerate a reversal for long. It’s much more likely to be strengthened legally, and as soon as 2021, via the proposed Equality Act.

Can see you are betting big for a Biden win
 

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Hi BBCW,

I believe you have mentioned before that IWDA and CSPX ETF are more tax friendly for non US investor as compared to those domiciled in US. Do you happen to know where can i get a list of such tax friendly ETFs for a Singaporean investor?

Currently, i am looking at S&P value etf but i can't find a tax friendly version listed in London exchange /domiciled in Ireland. thanks
 

yellownova

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Try this site https://www.justetf.com/uk/etf-lists.html

It has an extensive list of ETFs available and they will list whether it is Ireland domiciled (the one you want to look for, tax-wise).

Hi BBCW,

I believe you have mentioned before that IWDA and CSPX ETF are more tax friendly for non US investor as compared to those domiciled in US. Do you happen to know where can i get a list of such tax friendly ETFs for a Singaporean investor?

Currently, i am looking at S&P value etf but i can't find a tax friendly version listed in London exchange /domiciled in Ireland. thanks

Sent from Samsung SM-G975F using GAGT
 

BBCWatcher

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Goldman Sachs agrees with Moody’s: a Democratic sweep would boost the profits of U.S. S&P 500 companies. Some other factors — availability, effectiveness, distribution, and uptake of a COVID-19 vaccine, for example — are more consequential in terms of corporate profits. But Democratic control of the executive and legislative branches would be helpful, they say.

Relatedly, Goldman Sachs forecasts a slightly weaker U.S. dollar if there were a Democratic sweep. A weaker U.S. dollar tends to boost U.S. exports, in particular. From the perspective here a weaker U.S. dollar would be nice in terms of your online shopping from the U.S. (and your post-COVID-19 travel to the U.S. and other U.S. dollarized countries), and it might cause a little upward pressure on interest rates, eventually. Higher interest rates are good if you have fixed deposits and the like, not great if you’re a borrower.

Goldman Sachs forecasters think we might see a short-lived dip in U.S. stock markets if there’s a Democratic sweep. Their interpretation is that that would be a buying opportunity for market timers.

We should know about 6 weeks from now what the basic results are if not the details. (Congressional composition details might take a little longer.) Election Day itself is November 3 (U.S. timezones, all the way out to Hawaii and Alaska — Alaska is fairly competitive this year), but that’s only the last day of voting. Voting has already started, and postal mail ballots in many places can arrive several days after that date and be counted as long as they were sent on or before November 3.

If you happen to be a U.S. citizen who is or will be at least 18 years old on November 3, 2020, then there’s time to vote in the U.S. election (at least for federal offices) if you act now. To vote from overseas fill out an emergency ballot (called a “FWAB”) — follow the instructions — and send it into the election office serving your most recent place of U.S. residence (or, if you never lived in the U.S., based on your citizen-parent’s most recent U.S. residence; most states allow that). If you haven’t registered to vote in that jurisdiction in 2020 then you’ll also need to fill in a “FPCA” and send that in, too. You can visit Votefromabroad.org for solid help. Do it right now; don’t wait. Singpost airmail costs a mere S$1.40 for a stamp (which you can get from any post office or SAM kiosk), or maybe a bit more depending on what you need to mail — if it’s a piece of mail >20g or oversized.
 

celtosaxon

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Note in the article where is says - “its predictions were in stark contrast to what’s expected by most market participants”

Goldman has a poor record forecasting things... just back in March, they said the bottom would not be reached until July.

One thing we can be sure of is that raising corporate tax rates from 21% to 28% will negatively impact corporate earnings, which is the fundamental thing driving stock prices.

Nevertheless, whoever ends up as president, I don’t see it being that consequential. Often the best situation is when opposite parties control the executive & legislative branches, so neither side can push their agenda through. After all, we have the best government that money can buy.
 

ChinoGirl

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Hi BBCWatcher,

I am enrolled in the CareShield Life w.e.f 1 Oct 2020. Saw that NTUC launched their Care Secure rider to supplement the Care Shield life coverage.

What are your thoughts on it?Thank you.
 

ChinoGirl

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I’m also on GE PayAssure, with a 180 day waiting period. Premium is $107/month with a monthly benefit of $3600 plus. I took it up last Dec.

Just wondering if there would be overlaps in coverage?
 

aYu82

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Hi BBC,

May i know if all Bond ETF domiciled in US will be subjected to 30% dividend tax as well?
 

BBCWatcher

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Note in the article where is says - “its predictions were in stark contrast to what’s expected by most market participants”
That bit of reporting is not accurate. "Just look at the index level."

One thing we can be sure of is that raising corporate tax rates from 21% to 28% will negatively impact corporate earnings, which is the fundamental thing driving stock prices.
No, we're not sure of that. It depends on where that tax revenue goes, and there are also likely impacts on interest rates and behavioral impacts.

Nevertheless, whoever ends up as president, I don’t see it being that consequential.
I disagree.

I am enrolled in the CareShield Life w.e.f 1 Oct 2020. Saw that NTUC launched their Care Secure rider to supplement the Care Shield life coverage.

What are your thoughts on it?
I like the idea of expanding the definition of disability, and this supplemental policy can do that (a "2 out of 6 ADL" definition versus CareShield Life's 3 out of 6. However, I want to see what the premiums are and what competitors offer.

I’m also on GE PayAssure, with a 180 day waiting period. Premium is $107/month with a monthly benefit of $3600 plus. I took it up last Dec.

Just wondering if there would be overlaps in coverage?
Not too much. PayAssure is term to age 65 (ordinarily), whereas CareShield Life and its optional supplements provide lifetime coverage. The definition of disability tends to be more strict with CareShield Life and its supplements, and given the greater/higher severity of the disability there's some merit in having more income.

May i know if all Bond ETF domiciled in US will be subjected to 30% dividend tax as well?
I think it's mixed and depends on the specific fund, specifically how it handles its bond interest and dividend distribution accounting on behalf of foreign shareholders. You'll likely have to dig into the fund prospectus to figure out whether it works or not -- and maybe even ask the fund manager directly.
 

celtosaxon

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Hi BBC,

May i know if all Bond ETF domiciled in US will be subjected to 30% dividend tax as well?

Last month I did an experiment with my wife’s TD Ameritrade account, buying an international bond ETF, ticker: WIP which is supposed to have little to no withholding for non-US persons (according documentation from the fund manager, State Street), however, I just checked and sure enough, a full 30% was withheld by TD Ameritrade.
 
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livingcharsiew

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Certain iShares Funds generate qualified interest income and short-term capital gains that may be exempt from United States withholding tax when distributed to non-U.S. holders. The U.S. tax law permits a regulated investment company (“RIC”) to designate the portion of distributions paid that represent interest-related dividends (commonly referred to as qualified interest income) and shortterm capital gain dividends as exempt from U.S. withholding tax when paid to non-U.S. shareholders with proper documentation.

https://www.ishares.com/us/literatu...fied-interest-income-qii-percentages-2019.pdf
 

BBCWatcher

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At least three things have to happen for reduced or zero withholding:

1. The bond fund has to have nontaxable interest if the particular bond were held directly by the foreign investor;

2. The fund has to report this nontaxable interest accounting as part of the fund’s dividend distribution and associated reporting;

3. The broker has to know how to interpret this accounting data, apply it correctly, and assume the risk (which is considerable) that the broker underwithheld. The broker has to be “darn sure,” basically.

I’m not surprised by Celtosaxon’s finding. This stuff is tricky. Fortunately you should be able to claw back the overwithholding via a Form 1040NR filing with the IRS if the only problem is #3, but of course that’s a hassle and delayed.
 

zoneguard

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I like the idea of expanding the definition of disability, and this supplemental policy can do that (a "2 out of 6 ADL" definition versus CareShield Life's 3 out of 6. However, I want to see what the premiums are and what competitors offer.

The premiums can be found in the application form page 12 onwards:
https://www.income.com.sg/kcassets/3192d8cc-2c37-4fc0-9d78-4f7e0f534bca/Care Secure (Oct20).pdf

I also like the 2 ADLs definition of this product. But let's wait and see what other insurers come up with.
 

aYu82

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May i know if this ETF SPHY Dividend History & Description — SPDR® Portfolio High Yield Bond ETF has reduced or zero withholding tax? It seems better than IHYU.
 
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