International Social Security Agreements

The goal of all U.S. totalization agreements is to eliminate dual social and tax coverage while maintaining coverage for as many workers as possible under the regime of the country where they are probably most attached, both at work and after retirement. Each agreement aims to achieve this objective through a set of objective rules. Australia currently has 31 bilateral international social security agreements. The agreements allow SSA to add up U.S. and foreign coverage credits only if the worker has at least six-quarters of U.S. coverage. Similarly, a person may require minimum coverage under the foreign system for having attributed U.S. coverage to meeting foreign benefit eligibility requirements. Most U.S.

agreements remove the dual coverage of autonomy by assigning coverage to the worker`s country of residence. For example, under the US-Swedish agreement, a doubly covered independent US citizen living in Sweden, is only covered by the Swedish system and is excluded from US coverage. Provisions to remove double coverage for workers are similar in all U.S. agreements. Each sets a basic rule that refers to a worker`s place of employment. Under this fundamental “rule of territoriality,” an employee who would otherwise be covered by both the U.S. system and a foreign system is subject exclusively to the coverage laws of the country in which he or she works. Under these agreements, Australia equates periods of social security/residence in these countries with periods of Australian residence in order to respect the minimum entitlement periods for Australian pensions. Typically, other countries count periods of work stay in Australia as social security periods to fulfill their minimum payment periods.

As a rule, each country pays a partial pension to a person who has lived in both countries. International agreements on social security or social security, as so-called coordination instruments, allow a harmonised application of the national legislation of the countries party to the agreement on social security: the agreements also have a positive impact on the profitability and competitive position of companies with foreign activities by reducing their costs of operating abroad.