Social security pact for workers unlikely

  • Jayanth Jacob, Hindustan Times, New Delhi
  • Updated: Sep 27, 2014 01:02 IST

A decade on, India and US are still struggling to stitch together a pact that will help Indian professionals on short-term employment in the US repatriate their social security payments to their home country.

A totalisation pact between the two countries remains far from reality even though Prime Minister Narendra Modi is set to take up the issue — first raised by the previous NDA government and followed up by both UPA regimes — during his visit.

There are some 3,00,000 Indian professionals working in the US who are estimated to be paying $1 billion annually in social security taxes. But US law demands that only those who work for over ten years can get back the money paid as social security taxes.

International social security agreements, or totalisation pacts, help to do away with dual social security taxation — when a worker is required to pay social security taxes to both his country of origin as well as country of residence on the same earnings.

The agreements also help to fill gaps in benefit protection for workers who have to work in India and another country.

“This is one area where India and US have been locked in a conversation for far too long”, admits an official, adding “there is still a lot of distance to cover”.

The US has been arguing that the social security systems of the two countries are incompatible while Indian officials point out that India has signed social security pacts with many countries incl-uding Germany, Netherlands, France and Canada.

But the US has remained very choosy with regards to social security pacts in Asia.

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