Some Americans do not spend their entire professional careers working in America. Some actually work in other countries that have similar types of Social Security programs to cover them should they retire or become disabled. When an American worker is actually covered by Social Security and another country’s similar type of program it falls under Totalization Agreements.
What Are Totalization Agreements?
The Social Security Act allows the President to enter into international agreements to coordinate the U.S. Social Security Act’s title II (old age, survivors and disability) insurance programs with the social security programs of other countries. These agreements are known as Totalization agreements.
With What Countries Does The U.S. Have Totalization Agreements?
The United States currently has social security agreements in effect with 24 countries – Australia (2002), Austria (1991), Belgium (1984), Canada (1984), Chile (2001), Czech Republic (2009), Denmark (2008), Finland (1992), France (1988), Germany (1979), Greece (1994), Ireland (1993), Italy (1978), Japan (2005), Luxembourg (1993), the Netherlands (1990), Norway (1984), Poland (2009), Portugal (1989), South Korea (2001), Spain (1988), Sweden (1987), Switzerland (1980), and the United Kingdom (1985).
What Are The Purposes Of Totalization Agreements?
Totalization agreements have three main purposes:
- To eliminate dual social security coverage and taxation. This situation occurs when a person from one country works in the other country and is required to pay social security taxes to both countries for the same work;
- To avoid situations in which workers lose benefit rights because they have divided their careers between two countries. Under an agreement, such workers may qualify for partial U.S. or foreign benefits based on combined work credits from both countries.
- To increase benefit portability by guaranteeing that neither country will impose restrictions on benefit payments based solely on residence or presence in the other country.
