Us Social Security Totalization Agreements
Most totalization agreements remove restrictions on the payment of benefits to residents of partner countries. Under current legislation, U.S. citizens are generally entitled to benefits of the U.S. Social Security type, regardless of their country of residence.7 Non-resident aliens who have been absent from the United States for 6 months or more consecutively are generally not entitled to benefits unless they meet a legal exception to this requirement.8 The most frequent exceptions include : Most U.S. totalization partners have more social security agreements in place than the United States. 28 in November 2018. By comparison, in 2014, Canada, France, Germany and the United Kingdom – which enter into treaty-to-treaty totalization agreements, thus avoiding some of the legal constraints of the U.S. process – had 57, 80, 50 and 53 agreements respectively (Leeuwenhaag 2014). As has already been said, the removal of double taxation of income in other countries could lead to greater foreign direct investment in the United States. In addition, thousands of beneficiaries who are not currently eligible for a pension from one or both countries could benefit from an extensive totalization program. These exceptions, based on the country of nationality or nationality of the worker, are provisions of the Social Security Act. In most cases, totalization agreements expand the ability of benefits to be nsogability based on their residence.
Since the 1970s, U.S. negotiators have entered into bilateral agreements with 28 major trading partners to coordinate social security coverage and social benefits for people living and working in more than one country. They are called “totalization agreements” and are similar in the function and structure of contracts and are legally considered to be executive agreements of Congress concluded in accordance with the law. The agreements have three main objectives: the elimination of double taxation of income, the granting of protection to workers who have shared their professional careers between the United States and another country, and the full payment of benefits to residents of both countries. This article briefly describes totalization agreements, tells their stories and discusses proposals to modernize and improve these agreements. Suppose a worker born on January 2, 1951 applied for an old-age pension in January 2017. The worker worked in the United States for 8 years – from 1980 to 1987 – and earned the maximum amount of taxes subject to Social Security each year. As a result, the worker has accumulated 32 QCs, which is not enough to qualify for a superannuation only with U.S. coverage. However, this worker also covered in Switzerland. Since the United States and Switzerland have a totalization agreement and the worker has at least 6 QCs, it can be attributed to the worker`s Swiss coverage that he or she can benefit from a fully beneficiary benefit. The U.S.
worker`s benefit is calculated in the steps described below. Although many countries have multilateral totalization agreements (especially among members of the European Union), U.S. agreements are required by law to be only bilateral. Therefore, if a worker earns 6 or more QCs and has additional working time in each of the two countries with which the United States has a totalization agreement, only the coverage periods of one country or another can be combined with the QCs to entitle these workers.