SOCIAL SECURITY

News Release

United States and Mexico Sign Social Security Agreement

Agreement to Benefit U.S. Workers and Employers

Jo Anne Barnhart, Commissioner of Social Security, signed an agreement today with Dr. Santiago Levy Algazi, Director General, Mexican Social Security Institute, that will remove from U.S. citizens working for U.S. companies in Mexico the burden of paying social security taxes to both countries. The agreement also will remove the double taxation requirement for Mexican citizens working for Mexican companies in the United States. “This agreement eliminates a serious and unnecessary impediment to American and Mexican businesses and their employees,” Commissioner Barnhart stated. “Just as important, it promotes equity and fairness for workers who divide their careers between our two countries.”

Currently, U.S. companies that employ U.S. citizens in Mexico are required to contribute to both the U.S. and Mexican social security systems. When the agreement takes effect, U.S. and Mexican employers and their employees will contribute to either the U.S. or Mexican social security systems, but not both. This will result in approximately 3,000 U.S. workers and their employers sharing in tax savings of $140 million over the first five years of the agreement.

The agreement also will improve social security protection for people who work in both countries. At present, some workers who have divided their careers between the United States and Mexico fail to qualify for social security benefits from one or both countries because they do not meet minimum eligibility requirements. Under the agreement it will be possible for workers and their family members to qualify for pro-rated U.S. or Mexican benefits based on combined credits from both countries. This will result in approximately 50,000 U.S. and Mexican workers receiving benefits after the first five years of the agreement.

The agreement must be reviewed by the U.S. Congress and approved by the Mexican Senate before it can take effect. The United States has similar social security agreements with 20 other countries, including Australia, Canada, Chile, South Korea and nearly every country in Western Europe. In addition, the U.S. signed a social security agreement with Japan in February 2004, which is expected to take effect in late 2005.

NOTE TO CORRESPONDENTS: A fact sheet providing more information about the Social Security agreement between the U.S. and Mexico is attached. To find out more about agreements with other countries go to http://www.socialsecurity.gov/international/.

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