Ask the Advisor: July 2012

Ask the Advisor: July 2012

What is the status of the Social Security Totalization Agreement With Mexico?

Q: Could you tell me the status of the Social Security agreement with Mexico? There hasn’t seemed to be much news about it recently. If we get a new president does that mean the agreement would be dead?

A: Unfortunately, no. The highly controversial U.S. Social Security Totalization Agreement with Mexico that was signed by the Bush Administration is still pending. The agreement has not been submitted for review to the President or Congress, but that could quickly change, particularly in an election year. TSCL believes that if put into effect as it currently is written, the agreement would drain funds away from Social Security that are needed for the benefits of U.S. senior citizens. Totalization agreements were designed to eliminate dual taxation that occurs when a workers from one country works in another country and is required to pay Social Security taxes to both countries on the same earnings.

In addition, the agreements allow workers who split their careers in two or more nations to combine or “totalize” work credits from both countries. That allows them to become eligible for retirement benefits proportional to the amount of credits earned in either country. Although the U.S. has 24 such totalization agreements, most are with countries like the U.K. and Canada that have economies similar to ours. At issue in totalization with Mexico is whether millions of immigrants who have worked in this country without legal work authorization, along with their family dependents, would become eligible for U.S. Social Security benefits under the agreement.

The agreement appears ambiguous on this issue, and TSCL has filed four Freedom of Information Act requests in order to obtain copies of estimates of the cost to Social Security. After receiving the first known copy of the agreement in December of 2006, which apparently had never been made public, even to Members of Congress, the battle to obtain key documents in federal court has continued for TSCL. According to the State Department, public disclosure of the withheld information would risk undermining U.S. efforts in important areas of U.S. foreign policy. TSCL rejects this and will ask the judge to look at documents to see if they have been properly withheld. Although current U.S. law forbids the payment of Social Security benefits to illegal immigrants, there are loopholes and exceptions.

(For more details see our “FAQ: How ‘Undocumented’ Workers Are Becoming Entitled To Social Security.”) Of particular importance is an exception that applies to immigrants receiving benefits living in a country with which the U.S. has a totalization agreement. It appears that under the U.S./Mexico Totalization Agreement, all that any illegal Mexican worker must do to qualify for benefits is return to Mexico. Once a claim has been filed, the U.S. Social Security system counts all earnings, even for jobs worked without legal authorization, to determine entitlement to benefits. TSCL is particularly wary of how the 2012 presidential election may affect the status of the agreement. And, even if voters send a new president to the White House, the agreement will continue to remain pending even if no action is taken by President Obama, for the next President’s consideration.

TSCL believes Congress must ensure stronger protections of Social Security in order to prevent payments based on illegal work. TSCL supports legislation that would prevent Social Security credit being earned without legal status such as (S.95) introduced by Senator David Vitter (LA). Sources: “Status of Totalization Agreements,” Social Security Administration, October 22, 2009. “Social Security Benefits for Noncitizens,” Congressional Research Service, July 20, 2006.