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Social Security Agreements for Expats
Bilateral Social Security Agreements
As of 2013, the United States has entered into 23 international social security agreements with the following countries:
- Australia, Austria, Belgium, Canada, Chile, the Czech Republic
- Denmark, France, Germany, Greece, Ireland, Italy
- Japan, Luxembourg, the Netherlands, Norway, Poland, Portugal
- South Korea, Spain, Sweden, Switzerland, the UK
These bilateral agreements should take care of two issues for nationals of either country who come to live and work in the other one: First, the regulations ensure that expats only pay social security taxes to one of the two governments involved. Second, their history of social security contributions will be harmonized.
Even if you don’t have collected enough social security credits to qualify for benefits while working in your expat destination, this time won’t be lost then. Your years of making contributions to the social security program of the other country will count as well. When you retire, you will thus be entitled to two separate benefits from each country.
The Devil’s in the Details…
The exact regulations may vary from agreement to agreement. Most of them cover retirement, disability, and survivors benefits for expatriates, but you should always read up on your specific country to make sure. The Social Security Administration provides the full text of all US agreements online. In case that you’d like to avoid the legal jargon and focus on the practical aspects instead, have a look at the agreement descriptions aimed at the general public.
When reading through the provisions of your respective social security agreement, you should pay attention to finding out which program will offer coverage while you live abroad: Will you be insured via social security in the US, or can you keep participating in the social security plan offered by your country of origin?
Moreover, the overview descriptions on the SSA site include the relevant contact information for both the US social security office in question and its overseas counterpart. Don’t forget to get in touch with your office back home before you leave for the US!
What You Always Wanted to Ask about Social Security Agreements
During your preparatory appointment with the social security office in your home country, there are some points which you should definitely talk about. Even if you have found some related information online, check in person and ensure that it applies to your individual situation. For instance, there are exceptions to every rule, and some of these extra provisions might be to your advantage.
- In which country will you have to pay social security contributions?
- Where will you be acquiring social security credits to become eligible for benefits?
- How will your stay in the US affect the estimated amount of your future retirement benefits? Will they be higher or lower than the amount you’d have obtained if you had stayed at home? Is there a financial disadvantage you need to compensate for?
- Will you have to apply for benefits in both countries when you retire?
- In which country will you be able to receive benefits?
- Will your country of residence during your retirement years affect the sum you are entitled to? For example, will your pension be frozen, or will your benefits be cut if you move to another country for your “golden years”?
Even if your current home country does not have a social security agreement with the United States, you should still make an appointment with your local social security office before you relocate. In many countries, there are additional regulations that apply to expats living and working in so-called “non-agreement countries”.
What about Private Pension Plans?
Last but not least, you should find out if your impending move to the United States will impact your private retirement provisions as well. Obviously, these are not affected by social security agreements. So, if you have any private pension plans or participate in a company pension scheme in your country of origin, get in touch with the respective provider as soon as you can.
Frequently, such pension plans are not “portable”, i.e. you will no longer be able to participate once you move to the US. Therefore, you should get advice on if you can opt back in when you return from the USA, and how you might compensate for the loss in retirement provisions while you’re away.
If you have succeeded in finding work in the US, your new employer might provide a so-called 401k. This is the most common form of company pension plan in the US. Find out more about the topic in our guide to 401k schemes.
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