Totalization agreements foster international commerce, protect benefits for persons who have worked in foreign countries, and eliminate dual social security taxes that employers and their employees pay when they operate and reside in countries with parallel social security systems. Because Mexicans are believed to represent a large share of the millions of unauthorized workers present in the United States, a totalization agreement with Mexico has raised concerns that they would become newly eligible for social security benefits. To shed light on the possible impacts, GAO was asked to (1) describe the Social Security Administration's (SSA) processes for developing the agreement with Mexico, (2) explain how the agreement might affect the payment of benefits to Mexican citizens, and (3) assess the cost estimate for such an agreement.
Recommendations for Executive Action
|Social Security Administration||1. In light of the potential impact of totalization agreements on the Social Security Trust Funds, the Commissioner of Social Security should establish a formal process to identify and assess the major risks associated with entering into agreements with other countries. Such a process should include mechanisms to assess the integrity of a country's retirement data and records, as well as a means for documenting the range of analyses conducted by SSA.|
|Social Security Administration||2. In light of the potential impact of totalization agreements on the Social Security Trust Funds, the Commissioner of Social Security should enhance future reports to the Congress for proposed totalization agreements with other countries by making them more consistent and informative. Such reports should include consistent time periods for estimating both the short- and long-term effects on the trust fund and, as appropriate, include data on how alternative assumptions or sensitivity analyses could affect costs and potential beneficiaries.|
|Social Security Administration||3. In light of the potential impact of totalization agreements on the Social Security Trust Funds, the Commissioner of Social Security should work with the Office of the Chief Actuary to establish a regular process that examines original projected costs and beneficiaries affected versus what actually transpired over time and use this information, as appropriate, to adjust future estimating methods for totalization agreements.|