The French social security system, which we familiarly call the Sécu, is widely considered to be one of the best in the world – The World Health Organization (WHO) ranked the health system of its 191 member countries in 2000 and France tops the list for providing the best overall health care. Many do think that the Sécu just is a healthcare system, when in fact it encompasses much more than that. But what sets the French system apart IMHO is that it did not stop at covering people living in France, it also offers the possibility to continue enjoying some of our Sécu when working abroad as expatriates thank to the CFE – Caisse des Français de l’Etranger.

Quick review on the French Securité Sociale

Our system is rather complex and bureaucratic in its functioning, but remains quite simple from a user point of view. It divides itself in different categories, which can become quite confusing when digging deep, but the general category is the one which interest us here as it covers 80% of the population, and is the one on which the Caisse des Francais de l’Etranger (CFE) is based upon. For this category, the four main type of benefits are:

• Health insurance - medical, maternity, invalidity and death benefit non linked to a professional activity
• Professional accidents and disability – medical, invalidity and death benefit for accident arising from a professional activity
• Unemployment - income replacement when unemployed
• Retirement – defined income scheme on a national level

The system for French residents also encompasses benefits which are not listed here above (such as family benefits, and financial support to those who don’t have the resources to face handicap, age, medical, social and economic difficulties when other social benefits are insufficient or non existing) but understandably those benefits are not replicated by the CFE, so I won’t discuss them further.

The Piece de Resistance – The CFE !

The CFE stands for Caisse des Français de l’Etranger. It is an organization of the Social Security system set up in 1978 by the Legislature to handle the French expatriates’ social security needs. It provides cover for the four risks related here above (health, professional, unemployment and retirement) and you can choose to be covered against one or several of these risks.

To be able to apply for cover under the CFE, you need to be French, reside abroad, and not be covered by the French Social Security system. A non French can be covered only if he/she is dependant of a French resident – ex: A children or a spouse or common-law spouse who:

• is dependant to his/her French spouse and live under the same roof as the insured;
• does not receive any personal income, be it from employment, pension or allowance;
• and is not covered by any mandatory French or other Social Security regime.

If you work for a French company, your insurer usually is affiliated with the CFE and you are therefore automatically covered by the CFE. Your company pays for your premium and your life is easy. Should you not, or are working on a local contract without CFE benefits, you can chose to opt-in as an individual member. You then have to pay for your own cover. Note that subscribing to the CFE does not exempt you from paying mandatory contributions in your country of residence.

Premium will be calculated based on your income or, in if you are unemployed, based on your family resources. France being France, if your income is below a certain threshold for the medical cover, you are entitled to assisted premiums (Yes, the French system remains generous even to its expatriates !). Should you be curious, you can easily calculate your CFE premiums on their website by clicking here.

Following the options you chose to opt in, your cover will enable you to:

• Get your medical expenses reimbursed as per the French rates. This means that in a country like Malaysia or Thailand, where the cost of care is decent, the cover is pretty good on its own, while in countries like the US or Switzerland you better get supplementary protection (APRIL and GMC are the two provider I usually recommend)
• Ensure that you and your family are covered should something ominous happen to you such as unemployment, a long term disability or death.
• Accumulate pension trimesters which will enter in the calculation of your French pension when you retire.

My take on the system

We French are lucky to have such a comprehensive and versatile system; it enable us to enjoy our dear Sécu even when we are abroad. Even better, a new expat do not have to worry about waiting period for illness insurance or lost quarter-years of pension premium for retirement benefits as they can follow us word wide. But for all its advantages, I do not subscribe to the CFE myself. Why?

1. I do not believe the French retirement system will last. We set the system’s retirement age at 60 when our life expectancy was of 62 years. Nowadays, we easily live past 80 and I don’t believe we can sustain the present system; especially with unions who will fight tooth and nails to keep the retirement age set at 60.As a result, I prefer to prepare my retirement on my own. A good read on the Age crisis is the latest Economist Special Report: A slow-burning fuse
2. The unemployment, long term disability and death options are interesting but international providers do offer better options and rates.
3. Finally, my company do provide me with a good 1st Euro healthcare system from a French insurer. I enjoy pretty much the same benefits without having to go through the CFE itself.

I easily recommend the CFE for healthcare needs – even though I don’t receive any commission from them. I believe it is a great system, with many benefits. But its other options are not as competitive or interesting IMHO. Professional benefits are only interesting if they are provided by your company – i.e. you don’t pay for them; and I don’t believe in our pension system. Now, should you have worked for 20 or 30 + years in the French system and consider subscribing to the CFE for their pension option, you should do it just because of your sunk costs.

In the end you only can know whether you need to be covered by the CFE or not,  and which option make sense for you. If you need help, you can contact the CFE directly or simply post a question here under.

A MIDDLE-AGED man felt chest pains. As an executive at IBM, an information-technology firm, he had excellent health insurance, so he went straight to a specialist. His cardiologist put him through a bunch of tests, including a computerised tomography scan. A radiologist noticed something odd in his neck, so he went to a neck surgeon, who checked him out and found nothing. He went back to the cardiologist, who gave him an angiogram, which caused dangerous complications and landed him in hospital for a while. In all, he ran up more than $150,000 in medical expenses before the chest pains disappeared on their own.

When they reappeared several months later, he spoke to Paul Grundy, the head of health-care technology at IBM. Dr Grundy, a doctor of preventive medicine by training, asked him if his lifestyle had changed recently. The executive mentioned that he had taken up gardening again. Dr Grundy quickly established that his chest pains sprang from a muscle he had strained through overzealous weed-whacking.

The here above is an extract from the Life is expensive – A special report on business in America article by The Economist. The US health system is much discussed lately – with good reasons. I highly recommend any who wish to enter this discussion to read this article as it reflects pretty well where the system is today, and may open some eyes.

I also recommend this article as I laughed for a good five minutes when I saw this photo. You’ll understand why when you read its excerpt

For those who don’t know LM, they are a privately owned, specialist Australian income funds manager who provide established income funds with a range of flexible investment options: cash, conservative income and enhanced income. Their funds are on the rise, and their interest rates are quite attractive.

Personally, I am still lukewarm on their funds, but they do seem serious, and certainly do provide good industry reviews for the Australian property market. Here it is:

Whilst Australia is not immune from the global recession, its strong macro-economic framework continues to provide resilience within its general economy and property market, to ensure any recession is short term in nature.

Australia’s population continues to grow, supported by a fairly aggressive migration program which welcomes approximately 160,000 new Australians each year, who immediately contribute to the economy.

Fiscal policy and interest rates

• Since September 2008, Australia has seen a sharp reduction of 4.25% in interest rates, from 7.25% to 3.00%. Loan rates are now the lowest they have been in some 50 years.
• In addition, the Australian Government has implemented expansive and conservative fiscal policy of approximately AUD$60 billion, the equivalent of around 6.00% of GDP. According to the International Monetary Fund (IMF), this gives Australia’s government “scope to counteract the downturn”.
• The resultant Australian Government debt created by these expansionary policies will be subsequently less than experienced by other economies. Australian Government debt as a percentage of GDP is forecasted to be below 20.00% in 2014, compared to close to 80.00% for the UK, US and Euroland, and Japan at 140.00%.
• There have been NO government bailouts required, unlike the UK and Europe where massive bailouts have been required within the banking and corporate sectors.
• Australia’s banking sector is strong, with its four major banks each holding one of only 12 worldwide Standard and Poor’s AA+ ratings.

Funds management industry and financial services sector

• Australia has one of the largest and most tightly regulated funds management industries in the world.
• As part of the managed funds industry, the financial services sector is the fourth largest sector in Australia.
• Australia’s non-bank sector is well established and recognised. It constitutes approximately 35.00% of the financial services sector.

Property

• Australia’s property market is diverse and ranks in the top 10 globally.
• Australia has the second largest REIT (Real Estate Investment Trust) market in the world, after the US.
• The continuing housing shortage faced by Australia is being addressed at both Federal and State Government levels. Both are currently spending AUD$ billions on infrastructure to combat unemployment, and to provide the necessary framework for continued growth. The Federal Government currently provides a grant of between AUD$7,000 to AUD$21,000 to first home owners.
• During 2008, Australian property prices softened around 2.00% to 3.00%, with further marginal softening occurring in the first quarter of 2009.
• Sales activity is slow and there has been no volume of discounted sales, a result of the current environment of record low interest rates.

Many contracts to chose from

APRIL designed a range of 9 contracts covering accident or illness for expatriates. These contracts range from a simple, straight forward, international medical cover, to more comprehensive cover including out-patient, dental and optical. They also have contracts working on a monthly revolving basis to cover those on short missions, student exchange programmes or training, and an integrated Mutuelle which work as a  one-stop-center for French who want to remain in the French Social Security System (CFE) – If you are French and want to know more, read this article in french.

Great Medical Cover

Their hospitalisation cover from their Magellan contract is the best Medical Cover I’ve seen. You are covered for 100% of actual costs, up to a maximum amount of healthcare expenses which range from 200,000 to 500,000 Euros – these doubles in the event of accident or critical illness.

I do like the fact that these cover includes pregnancy delivery, even for their most basic plan. Sweet.

Best of all, their prices also are sweet. You would pay from 336 Euro if you are a 21 years old on a 200K cover, up to 2,832 Euros if you are over 70 years old on a 500K cover.  Pretty cheap by international standards.

Cover for life

Many insurer do tell you that they will keep covering you in your old days. But it is very hard to find it in writing. April does write it down. The following lines can be found on page two of most of their contract:

APRIL Mobilité offers lifetime healthcare cover if you take out a policy before age 71. You are then covered for as long as you wish with no increase in premium regardless of the level of your expenses.

I love it. To the point that I am introducing their insurances to all my clients who are in their 50s, advising them to switch to APRIL. To me, this is the perfect option for those who want to retire internationally, with programmes such as the Malaysia My Second Home Program.  An international insurance, replicating the French Social System, with a lifetime cover.

As you can see, I like this insurer very much. The more I work with them, the more I like what I see. If you feel like you’d like to know more, I invite you to visit their website (APRIL Mobilité). Unfortunately it is in French, but they do have most of their brochures and information in English. You can also contact me directly and I’ll be happy to provide them to you.

I’ll wrap this post up with a few figures on APRIL Mobilité and the APRIL Group.

APRIL Mobilité in figures

• More than 35,000 persons are currently covered by APRIL Mobilité
• More than 1,000 companies use their service for their expatriates
• More than 3,000 students covered per year

APRIL Group in figures

• 2.5 Million person insured
• 3,200 employees world-wide
• More than 30 years in business
• ISO 9001 2000 certification awarded in 2002

The Basics

Amanah saham is simply the Malay word for unit trust. The term is widely associated with unit trust schemes managed by Permodalan Nasional Berhad (PNB).

ASB was launched on May 1989 and may be the most popular unit trust scheme of PNB thanks to its open-ended structure and many benefits. Here more info on the ASB scheme and why it is so interesting:

1. Low-Risk
2. Capital guaranteed
3. Price per unit is RM1.00
4. Dividends are exempt of tax
5. No sales or redemption charge
6. Dividends are computed monthly, but are calculated annually
7. Open to Malaysian Bumiputras aged 18 and above. A Trust can be set up for those aged between 12 and 18
8. You can only invest up to RM200,000, but your balance can be higher thanks to compounding growth

All this sounds pretty solid by itself. But what really sets this fund apart is its Bumiputra specificity. Thanks to it, PNB will always strive meet Bumiputera’s interest by directing most of its profits to ASB.  This explains why ASB has consistently out-performed other PNB Schemes (ASN, ASN 2, ASW 2020, ASM etc.) and why the following performance are so good.

Fund Performance

As you can see, the returns are pretty juicy for such a safe scheme. ASB returns and flexibility offer a great venue for Malays to start investing and build up their equity. After all, such schemes were set up for just this purpose (A little history on Amanah Saham Nasional and PNB), and most Malays should take up this low hanging apple and have some ASB in their portfolio mix.

A few related articles:

• How to calculate ASB dividend and bonus
• Why Borrowing to Invest in ASB Is A Bad Idea
• Can You Purchase Amanah Saham Units Using Maybank2U.com?

Note No.1 – This article is not here to judge of the morality of the ASB schemes.

Note No.2 – There has been some discussion in the blogosphere about the Haram status of PNB’s scheme and ASB particularly. If such things are important to you, please do your background research and make sur ASB is following your investment principles.