The US has such “social security totalisation” pacts with 22 countries, whereby workers who spend three years in the US hold on to their pension benefits as the 10-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 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 4 years in India, 3 years in US and 3 years elsewhere, without losing retirement funds,” the official added. Bilateral talks on the issue had intensified after Singh and Bush issued the joint statement on July 18, 2005 to move towards a new strategic relationship. Last December, the US Social Security Secretary visited New Delhi, but little progress was made. Under Section 233 of US social security laws, international agreements may only be arrived at with countries with a “generally applicable” social insurance or pension system.

Between December 2007 and now, India has made some progress on this front which it convinced the US administration about. The Unorganised Sector Workers’ Social Security Bill has been introduced in Parliament as well as reviewed by a standing committee. The Rashtriya Swasthya Bima Yojana has also been kicked off.

“It has been an intractable wall we have been chipping away at for years, but this time, we feel they are convinced that there is a sound social security sytem in India,” the official said. If India succeeds in formalizing the pact, it will be only the second Asian country after South Korea to do so. Once signed, the US President will have to report the deal to the Congress with a report on the estimated number of individuals affected and its effect on the Social Security fund’s flows.