Advice Needed: NS liability for new PR

[BBCWatcher]

There are still some public school, public hospital/clinic, and housing benefits, as examples. But if you don't have children in public school, have decent or better medical insurance already, and rent instead of buy housing, those PR benefits probably don't matter.

There's also a modest bit of money available to get some physical activity, and you're treated a bit better at the public libraries. And the rules are a bit more generous in terms of LTVP v. DP sponsorship, so (on average) you can bring more relatives in, other things being equal. You can also get some slightly better deals at certain merchants (mobile phone/Internet/cable TV contracts, more credit card options, lower SP Services deposit), none of which are terribly exciting.

On the negative side, I believe you lose the tax break that some globe hopping (greater than 90 days per year outside Singapore) foreign professionals enjoy.

Anything else I'm missing?

[BBCWatcher]

But, with New Medisave mandatory charges plus the ever weakening SD dollar against the US dollar, 4 percent isn't enough to stay even.

I absolutely agree with you that it doesn't make sense to maintain PR status if you have no reasonable prospect of ever taking advantage of it now that there are MediShield Life premiums -- in effect a monthly "membership fee" (that increases with age and, probably, with inflation) in order to maintain PR status or citizenship. Why pay for something you aren't going to use?

That said, the decision about whether and when to withdraw CPF funds is a separate one. Personally I'd let the money ride, and I certainly wouldn't be converting Singapore dollars to U.S. dollars when the former is "weak." Currencies bounce around, but it never makes sense to buy U.S. dollars when they're expensive if you can avoid it, just as it doesn't make sense to pay more for shoes than you have to. On top of that, a withdrawal might be a foreign taxable event. (It depends on the foreign tax code.) Timing the withdrawal for foreign tax reasons may also be prudent.

If you need the money now you need the money now, but, for what it's worth, a ~4% minimum guaranteed yield on AAA rated Singapore dollar funds looks like a very, very good deal to me. I'd probably let that one ride, especially if (but not only if) I would spend some Singapore dollars in the future (tourist visits to Singapore for example), and thus the currency swings matter less because I would need some Singapore dollars anyway.

There's also the intermediate option of withdrawing funds but not converting them, or at least converting them in a dollar cost averaging way (fixed Singapore dollar amount of U.S. dollar purchases per month stretched over many months, for example, and assuming low or zero per transaction costs).

Does CPF allow partial withdrawals? That'd be nice, to keep the 4% yield while slowly dollar cost averaging across currencies. On edit, answering my own question, yes and no. You can optionally withdraw funds on a normal retirement schedule (age 55+), but if you apply for a withdrawal based on termination of PR and departure, it's all or nothing.

Another potential factor to consider is whether your foreign social security retirement benefit might be affected by your CPF income stream. U.S. Social Security, for example, has something called the Windfall Elimination Provision which can reduce your monthly U.S. retirement benefit in certain cases if you're receiving a comparable foreign benefit. You might be able to avoid the WEP if you have a well timed full balance CPF withdrawal, but I'm speculating a bit. If my speculation is correct then one reasonable approach might be to withdraw CPF funds on a normal retirement schedule until age 69 1/2, then apply to withdraw all the remaining CPF funds, then spin up U.S. Social Security starting at age 70 (and avoid the WEP, and with the maximum monthly benefit since you waited until 70). That's the basic idea, anyway, with more research required to confirm that.

[Primrose Hill]

Thank you for the great info. Keep us posted SE when you are finally withdrawn your CPF. Currently, I am planning to leave my CPF here and top up to the max when I leave. Well, that's the plan at the moment. If I take a lump sum back to UK, I will be taxed heavily and since this is supposedly pension savings why not leave it here.
Do you or anyone know if it can be withdrawn monthly from overseas? How does the withdrawal work anyway?

[x9200]

There are still some public school, public hospital/clinic, and housing benefits, as examples. But if you don't have children in public school, have decent or better medical insurance already, and rent instead of buy housing, those PR benefits probably don't matter.

There's also a modest bit of money available to get some physical activity, and you're treated a bit better at the public libraries. And the rules are a bit more generous in terms of LTVP v. DP sponsorship, so (on average) you can bring more relatives in, other things being equal. You can also get some slightly better deals at certain merchants (mobile phone/Internet/cable TV contracts, more credit card options, lower SP Services deposit), none of which are terribly exciting.

On the negative side, I believe you lose the tax break that some globe hopping (greater than 90 days per year outside Singapore) foreign professionals enjoy.

Anything else I'm missing?

There are also some benefits, or better say, procedural simplifications, if one runs her/his own business. IIRC, holding the entrepass, a local agent is required to deal with Acra's BizFiles. If the owner is a PR, s/he can do all by himself.

[BBCWatcher]

Yes, that's a good one, x9200. All the self-employment options open up. (Side note: self-employment and starting/owning foreign businesses are somewhat less attractive to any U.S. citizens in the audience. It can be done, but there are some tax and financial reporting complexities.) You can also do things like work part-time as a barrista at Coffee Bean or Starbucks while taking a course in French impressionist art, or whatever -- assuming that works for you financially.

[sundaymorningstaple]

I think I may have gotten around the WEP regarding the CPF. Every year I've always reported ALL the contributions to CPF as Income on my US tax returns (including adding in the Employers contributions as well as that is income to me albeit held in escrow by the CPF board. I have also reported all the interest income from the CPF board annually, therefore, it is nothing more than a savings account. The Income has already been taxed in the US as well the interest. Granted, It might become a test case, but I'll chance it should I eventually opt for a full withdrawal or even if I take it as a monthly payout (retirement). I've read most everything I can find on this and I still think I might have a leg up in this regard.

[BBCWatcher]

I think you've handled the U.S. tax aspects correctly based on what I know, or at least not incorrectly. [Whether the ~4% has to be taxed annually or upon withdrawal is an interesting question. In many cases annual is better since you might be able to spread those gains across lower or even zero tax brackets. It appears that the employer's contributions have to be reported as gross U.S. taxable income in each year they occur, and they're not excludable -- annoying, but that's how it goes. Same thing: that might still be OK if those contributions are within your personal exemption and standard deduction.] The WEP is a separate issue, though. I don't think I agree with your hypothesis, or at least I don't think the U.S. Congress did when they introduced the WEP in the 1980s. Unfortunately. Please let us know what the SSA decides when the time comes.

Note that the WEP doesn't apply if either you qualify for U.S. Social Security retirement benefits based on a totalization treaty (i.e. you have less than 40 U.S. credits, but you qualify for U.S. benefits based on contributions to a treaty country's social security system -- Singapore is not a treaty country) and assuming your U.S. earnings history was early enough (before 1995), or if you have at least 30 years of "substantial" U.S. contributions. In 2015, for example, "substantial" meant $22,050 of U.S. Social Security taxable earned income. If you have more than 20 then the full impact of the WEP is reduced -- reduced progressively more as you approach 30.

[sundaymorningstaple]

I believe the determination is if the 'social security" system is in a lump and determined by your contributions as opposed to you putting in and getting back your own money. The Singapore system isn't considered as a social security system as it's able to be withdrawn for housing, schooling, medical services and even investing in the stock market. Therefore I believe it's been determined that the CPF system doesn't qualify under the WEP rulings. I believe the Singapore case has come up before and provided all income and Interest was reported annually, would not qualify. An additional filip was the fact that if you left Singapore and gave up your PR then you could, in fact, remove all your contributions and interest and did not have to wait for a specific age before you could start drawing down on it, e.g., as a pension.

I've done a fair bit of research on this and so far, unless something new crops up, I'm pretty sure I'm safe. But on the US SS side, I've virtually got no SS coming anyway as I've been away most of my adult life (but I've got my quarter in but right after high school, sure wasn't making much bread to pump it up. I got a year and a half left before I apply for my SS 'joke' benefits.

[BBCWatcher]

I hope you're correct. Please keep us posted on what the SSA determines in your case when the time comes.

You can delay claiming U.S. Social Security retirement benefits until age 70 (if you can afford to delay), and then the monthly amount would at least be less of a joke. If you're in good health then delaying is generally a wise thing to do. Don't delay until past 70 since that's when the increase in the monthly benefit amount stops.

Go ahead and claim your free U.S. Medicare Part A at age 65 if you qualify (also if you have 40 credits, but treaty country contributions don't count). The other parts of Medicare cost money, and in my view one shouldn't pay for them if you don't at least visit the United States. But the free Part A doesn't hurt, even if you never use it, so why not.

If you're legally married (opposite or same sex now, even if Singapore doesn't recognize the latter) your spouse can ordinarily claim a spousal benefit with a largely separate decision on when to claim, also with his/her own minimum age requirement. Yes, even most nonresident alien spouses qualify. Even some past spouses qualify, post divorce.

If you worked in any treaty country(ies) and made contributions into those systems then you should be able to claim retirement benefits from them, too. In that case the WEP might apply, but the WEP is not a reason to avoid claiming all benefits you're entitled to claim. You still always come out ahead.

[sundaymorningstaple]

BBC, I'm just over a year & a half away from 70! Part A has already been duly done several years ago. All the paperwork is in a folder in my filing cabinet at home.

[BBCWatcher]

Awesome! Well done, and keep doing it.

[ecureilx]

I hope you're correct. Please keep us posted on what the SSA determines in your case when the time comes.

You can delay claiming U.S. Social Security retirement benefits until age 70 (if you can afford to delay), and then the monthly amount would at least be less of a joke. If you're in good health then delaying is generally a wise thing to do. Don't delay until past 70 since that's when the increase in the monthly benefit amount stops.

Go ahead and claim your free U.S. Medicare Part A at age 65 if you qualify (also if you have 40 credits, but treaty country contributions don't count). The other parts of Medicare cost money, and in my view one shouldn't pay for them if you don't at least visit the United States. But the free Part A doesn't hurt, even if you never use it, so why not.

If you're legally married (opposite or same sex now, even if Singapore doesn't recognize the latter) your spouse can ordinarily claim a spousal benefit with a largely separate decision on when to claim, also with his/her own minimum age requirement. Yes, even most nonresident alien spouses qualify. Even some past spouses qualify, post divorce.

If you worked in any treaty country(ies) and made contributions into those systems then you should be able to claim retirement benefits from them, too. In that case the WEP might apply, but the WEP is not a reason to avoid claiming all benefits you're entitled to claim. You still always come out ahead.

Is this where I (feeling left out ... ) say, this is all wonderful, for a guy asking about NS Liability, to be taught about US and CPF and Medisave and all

SMS, I told you, BBCW is a clone of JR8 !

[BBCWatcher]

There's a reasonable, rational, logical progression. Somebody asking about the national service implications of PR status after applying is unlikely to be familiar with all or even most of the pros and cons -- there are some of both -- associated with PR status. One of the pros and cons (some of both) is the requirement to make CPF contributions. And one of the cons associated with CPF for some people is the effect CPF contributions and benefits can have on foreign tax and social insurance arrangements, the U.S. as an example (but only an example).

It all flows; not crazy. That's what information sharing through public forums like this one ought to be about, at least one hopes.

[x9200]

SMS, I told you, BBCW is a clone of JR8 !

They are very different. One has an engine that aims at delivering information based on some psychological assumptions, the other has it aiming at completeness of the information.

[ecureilx]

There's a reasonable, rational, logical progression. Somebody asking about the national service implications of PR status after applying is unlikely to be familiar with all or even most of the pros and cons -- there are some of both -- associated with PR status. One of the pros and cons (some of both) is the requirement to make CPF contributions. And one of the cons associated with CPF for some people is the effect CPF contributions and benefits can have on foreign tax and social insurance arrangements, the U.S. as an example (but only an example).

It all flows; not crazy. That's what information sharing through public forums like this one ought to be about, at least one hopes.

Right, agreed Not. And NOT, and humbly NOT.

I know you like to write long, long thesis like posts for simple questions. But I can't still figure out how your expounding about the US Social Security - from NS - to CPF to SS .. and the likes will help a guy who just asked if he needs to do NS. Never mind, it's fine. But that's how the threads drift too far from the original query, till a new visitor can't figure out where the anwer for the original question is hidden in the 10,000 word essays.

And after all, if the original poster was from, say, Lithuania, or Timbuktu, he may now be wondering what relevance the quoting of US system is ... for his question, which progressed 'naturally' in your words ...

PS: love this quote of yours You may qualify to be a Mod soon Or I do pray you will be a mod so each post can morph into 10,000 word essays (and the customary - 'no offense' statement applies here )

It all flows; not crazy. That's what information sharing through public forums like this one ought to be about, at least one hopes.

SMS, I told you, BBCW is a clone of JR8 !

They are very different. One has an engine that aims at delivering information based on some psychological assumptions, the other has it aiming at completeness of the information.

+1