How Social Security Agreement Benefits International Workers and NRIs

A social security agreement, sometimes known as an SSA, is a pact between two nations that safeguards the rights of cross-border employees. In general, the SSA avoids double coverage and threats both foreign and domestic workers equally, particularly in terms of social security. India has signed SSA with 19 countries including Belgium, Germany, Switzerland, Denmark, Norway, Luxembourg, France, South Korea, Netherlands, and Hungary to name a few.

Under an SSA, three different categories of benefits are often granted to international workers and NRI. As follows:

Detachment: This refers to the elimination of dual contributions, which means that workers who relocate for employment to any country with an SSA are exempt from making social security contributions in the host country for a specific period (specific to each SSA), as long as they continue to make social security contributions in their home countries. If the employee presents a ‘Certificate of Coverage’ (CoC) from the home social security authorities with the host country social security authorities, they will be eligible for this benefit.

Exportability: Under this pension clause, an employee has the option of receiving social security benefits in either their home nation or their host country, without any difference in the value of the benefits. As a result, workers who have been collecting social security benefits in their host country might export such benefits to their home country or beneficiaries after retiring or finishing their employment there.

Totalization: Under the totalization of benefits provision, the length of time an employee worked in a foreign nation is taken into account when determining whether or not they are eligible for benefits, but the amount of payment is prorated based on that length of time.

Benefits

International social security agreements help provide continuity of benefit protection for people who have accrued social security credits under one country’s system, in addition to improving social security coverage for active workers. Such agreements ensure that retirees who split their service between several nations won’t lose out on retirement benefits.

Since PF contributions were not required in cases where an employee’s wages exceeded the salary ceiling, international workers in India were not included by the system until 2008. However, Indian nationals living abroad were required to pay into the local social security system. And these contributions were mostly lost because of the brief time spent serving abroad or because the required minimum qualifying term of contribution or residence was not met.

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