Bilateral Social Security Agreements: What Are They and How Do They Work?
If you’ve ever moved from one country to another for work, you may be familiar with the term “bilateral social security agreement.” These agreements, also known as totalization agreements, are designed to help protect the social security benefits of workers who split their careers between two countries. In this article, we’ll take a closer look at what bilateral social security agreements are, how they work, and what they mean for workers and employers.
What are bilateral social security agreements?
Bilateral social security agreements are treaties between two countries that govern the way social security benefits are paid to workers who have worked in both countries. These agreements help to eliminate dual taxation of social security benefits and ensure that workers receive the benefits they are entitled to. They also protect individuals from the loss of social security benefits due to differences in the social security systems of two different countries.
How do bilateral social security agreements work?
Bilateral social security agreements typically contain a number of provisions that help to clarify the rules for determining social security eligibility and benefits for workers who have worked in both countries. These provisions include rules for determining which country’s social security system will apply to the worker, as well as rules for calculating and paying benefits.
For example, under the U.S. – Canada Social Security Agreement, a worker who has worked in both countries may be eligible for benefits from both countries. Under the agreement, the worker’s total years of coverage in both countries are added together to determine eligibility for benefits. If the worker has at least 10 years of coverage in one country and less than 10 years of coverage in the other country, the country where the worker has at least 10 years of coverage will pay the benefits.
What do bilateral social security agreements mean for workers and employers?
For workers, bilateral social security agreements mean that they can be assured their social security benefits won’t be lost as a result of moving between countries. They can also be assured that their benefits won’t be subject to dual taxation. For employers, bilateral social security agreements mean that they can more easily hire workers who have worked in different countries without worrying about the complications of different social security systems.
Overall, bilateral social security agreements are an important tool for protecting the social security benefits of workers who have worked in multiple countries. By clarifying the rules for determining eligibility and benefits, these agreements help to ensure that workers receive the benefits they are entitled to. For employers, these agreements provide a way to hire workers from different countries without worrying about the complexities of different social security systems. If you’re a worker or employer who is involved in international employment, it’s worth taking the time to understand how bilateral social security agreements can apply to you.