Social Security, pensions and the US-Germany totalization agreement

An American career split between the United States and Germany touches two social security systems. Without coordination, you could pay contributions to both on the same earnings, and short stretches of work in each country might not be enough to qualify for a pension in either. The US-Germany social security agreement, which the Social Security Administration (SSA) calls a totalization agreement, addresses both problems.

I lived and worked in Germany, and German pension contributions appeared on every payslip, next to health, unemployment and long-term care insurance. This guide explains what the agreement does, who pays where, how credits combine, and how Americans living in Germany deal with US benefits. All details come from the SSA, the US Embassy and the German pension insurance; check them for your own case.

What the agreement does

The SSA describes the two purposes of totalization agreements:

1. Eliminate dual social security taxation, where a worker would otherwise pay social security taxes to both countries on the same earnings.
2. Fill gaps in benefit protection for workers who divided their careers between the United States and another country.

For Germany, the SSA states that the agreement covers the wage earners' and salaried employees' pension insurance, miners' pension insurance, steelworkers' supplementary pension insurance, farmers' old-age security, and the taxes that finance Germany's sickness insurance and long-term nursing care programmes.

Who pays where: employees

The basic idea is that you pay into the system of the country where you work. An American hired locally by a German employer normally pays into German social insurance, not US Social Security.

Agreements also contain a rule for employees sent temporarily abroad by their employer, who can remain covered in their home country. The SSA explains that when an agreement assigns coverage to the United States, it issues a US certificate of coverage, which proves that the employee and employer are exempt from paying social security taxes in the other country. Employers and self-employed people can request certificates online.

The reverse also exists. To establish exemption from US Social Security, the SSA says your employer in Germany must request a certificate of coverage (form D/USA 101) from the local German sickness fund that collects your German social security taxes. You show your German social security number rather than your US number.

Who pays where: the self-employed

For self-employed people, the SSA gives clear rules:

• Self-employed workers who work only in the United States are assigned US coverage.
• Self-employed workers who work only in Germany are assigned German coverage.
• Workers normally self-employed in one country who transfer their business to the other country for five years or fewer remain covered in the country they transferred from.

If you would otherwise pay into both systems, you write to the SSA for US coverage or to the German sickness fund that collects your contributions for German coverage. The SSA lists the details to include: full name, date and place of birth, citizenship, country of permanent residence, US and German social security numbers, the nature of the activity, the dates, and the business name and address in both countries.

Combining credits for benefits

Under US Social Security, you can earn up to four credits per year, depending on covered earnings. Under the German system, credits are measured in months.

If you do not have enough credits in one country, the agreement lets each country count your coverage in the other:

• For German benefits, the SSA states that credits from both countries can be counted when needed, but you must have at least 18 months of coverage credited under the German system.
• For US benefits, US and German credits can likewise be combined when needed to qualify; check the SSA's minimum for counting foreign credits.

Each country then pays a benefit based only on the coverage earned in its own system. A totalized benefit is usually smaller than a full benefit.

The SSA's summary of German rules shows, for example, that a German old-age benefit requires five years of coverage, and that survivors' benefits also require five years of coverage or entitlement before death. Because German retirement ages have been changing, check the current age for your birth year with the German pension insurance (Deutsche Rentenversicherung) rather than relying on older tables.

Voluntary German contributions

The SSA notes that the agreement allows US nationals to make voluntary contributions to the German programme if they meet certain conditions. These can help a person qualify for a German benefit or raise its amount. The SSA directs questions to Deutsche Rentenversicherung Bund in Berlin or Deutsche Rentenversicherung Nord in Hamburg, which handles pension insurance for wage earners and salaried employees in international cases.

Applying for benefits

You can apply in one country and ask that your application also count as a claim in the other country. The SSA says the information is then sent to the other country, each country processes the claim under its own laws, counting foreign credits where appropriate, and each notifies you of its decision.

Receiving US benefits while living in Germany

There are no Social Security offices outside the United States. The SSA's International Operations works with US embassies and consulates.

For Germany, the US Embassy states that all SSA beneficiaries and applicants living in Germany must direct their questions to the SSA Federal Benefits Unit (FBU) at the US Consulate General in Frankfurt. Key points from the embassy:

• The FBU serves residents of Germany and Liechtenstein for the SSA, Veterans Affairs, the Office of Personnel Management, the Department of Labor and the Railroad Retirement Board.
• The most efficient contact route is the embassy's online Frankfurt FBU Navigator.
• To apply for benefits, you can apply online at ssa.gov, call the SSA's toll-free international call center, or mail a signed statement with your details. Emailed requests on their own are no longer accepted.
• All FBU services require an appointment.
• The SSA is tightening identity checks for direct deposit changes; the embassy notes the easiest secure route is a personal my Social Security account.

The SSA also publishes a Payments Abroad Screening Tool that shows whether your retirement, disability or survivor payments will continue while you are outside the US, stop after six months, or face country-specific restrictions. Run it for Germany and your benefit type before you move.

The WEP and GPO change

People with a foreign pension and a US Social Security benefit used to worry about the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). The SSA reports that the Social Security Fairness Act repealed WEP and GPO, and publishes updates on how affected benefits are recalculated.

Checklist

1. Find out which country's system covers your work.
2. If sent by a US employer, ask for a US certificate of coverage.
3. If locally employed but still paying US tax, ask your German employer to request form D/USA 101.
4. Keep German pension statements and your US earnings record.
5. Contact the Frankfurt FBU for US benefit questions while in Germany.
6. Run the SSA Payments Abroad Screening Tool before you move.

Common questions

Do I pay US Social Security tax if I work for a German employer? Normally you pay into the German system where you work. If you are also liable for US tax, your German employer can request a certificate of coverage (form D/USA 101) to show exemption.

Can I combine US and German work credits? Yes, when needed to qualify. For German benefits, the SSA says you need at least 18 months of German coverage before credits are combined.

Who handles my Social Security questions while I live in Germany? The SSA Federal Benefits Unit at the US Consulate General in Frankfurt, reached through the embassy's online FBU Navigator. Services require appointments.

Can I make voluntary payments into the German pension system? The agreement allows US nationals to make voluntary contributions under certain conditions. Contact Deutsche Rentenversicherung for the details.