Indian expats in the US stand to gain from N-deal fallout

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With Prime Minister Manmohan Singh’s government finally moving forward to conclude the Indo-US civilian nuclear cooperation agreement, the George Bush administration is also demonstrating its keenness to resolve other crucial bilateral issues in India’s interest.

One long-standing Indian demand for a social security pact that allows Indian workers stationed in the US to repatriate their contributions to the US social security system on their return to India is close to being met.

Over $1 billion in contributions to the US Social Security Fund are made annually by 80,000-odd ‘detached workers’ from India working on consultancy and onsite assignments, at the rate of 15% of their basic salary. However, when they return to India, these contributions are forfeited, as the minimum period to qualify for pension benefits in the US is ten years (as in India).

After a series of meetings between Indian officials and the US Social Security Administration, as well as a senior official from President Bush’s executive office in Washington last week, Indian workers’ annual donations to the US social security fund, which has a $4.1-trillion deficit, may finally come to an end.

“We are close to sealing the pact. Indian workers who spend three years in the US would get a refund of their contributions to the US pension system. Moreover, the pension will also be portable; once a worker completes the qualifying period of ten years, the pension will be payable in either country,” a senior government official told FE.

The US has social security totalisation pacts with 22 countries, whereby workers who spend three years in the US hold on to their pension benefits as the ten-year qualifying period takes into account the time spent by workers in their original country’s pension system.

India has recently signed such deals with Belgium and Germany.

If both the US and India have bilaterals with a third country, the totalisation and portability principles will apply in those cases as well. So, a worker could spend four years in India, three years in the US and three years elsewhere without losing retirement funds,” the official added.