Do bilateral social security agreements deliver on the portability of pensions and health care benefits? A summary policy paper on four migration corridors between EU and non-EU member states

Abstract

This policy paper summarizes four corridor studies on bilateral social security agreements (BSSAs) between four European Union (EU) member and two nonmember states, draws conclusions on their results, and offers recommendations. BSSAs between migrant-sending and migrant-receiving countries are seen as the most important instrument to establish portability of social security benefits for internationally mobile workers. Yet, only about 23 % of international migrants profit from BSSAs and their functioning has been little analyzed and even less assessed. The four corridors studied (Austria-Turkey, Germany-Turkey, Belgium-Morocco, and France-Morocco) were selected to allow for comparison of both similarities and differences in experiences. The evaluation of these corridors' BSSAs was undertaken against a methodological framework and three selected criteria: fairness for individuals, fiscal fairness for countries, and bureaucratic effectiveness for countries and migrant workers. The results suggest that the investigated BSSAs work and overall deliver reasonably well on individual fairness. The results on fiscal fairness are clouded by conceptual and empirical gaps. Bureaucratic effectiveness would profit from information and communication technology-based exchanges on both corridors once available. JEL Classification: D69, H55, I19, J62

The portability of social benefits across borders

“…Three main approaches can be used to establish portability: (i) changing the benefit design to make benefits as portable as possible without government action; (ii) establishing portability arrangements unilaterally, bilaterally, and/or multilaterally; and (iii) using multinational private sector providers [7].…”

“…However, despite the strong support of many social scientists, little rigorous evidence as understood by economists exists about their actual working. To explore the delivery of BSSAs between EU and non-EU countries in relevant migration corridors, a World Bank-sponsored project undertook four migration corridor studies [7]. The Austria-Turkey, Germany-Turkey, Belgium-Morocco, and France-Morocco corridors, all well-established migration corridors, were selected to reflect similarities and differences.…”

The cross‐border portability of social security benefits: Status and progress?

“…The three key options – cross‐country agreements, multinational providers, and benefit redesign – are both substitutes and complements, and have not yet been rigorously compared and evaluated. BSSAs between migration corridor countries are often considered the best approach to establish portability; based on the few available corridor studies, BSSAs seem to work broadly well (Holzmann, ). Yet prior to this article, the only other available data (from 2000) suggest that only 22 per cent of the world’s migrants move between countries where BSSAs exist (Holzmann and Koettl, ; Avato, Koettl and Sabates‐Wheeler, ).…”

The ABCs of nonfinancial defined contribution (NDC) schemes

“… For NDB schemes, portability arrangements have been established between countries in bilateral social security agreements (or directives within the European Union (EU) for all Member States). They seemingly work reasonably well where they exist between countries as they do not create mobility obstacles or financial advantages of one country over another, and are not too administratively cumbersome (Holzmann, ). Absent such agreements, portability issues will emerge in the case of long waiting periods (before becoming eligible) as individuals may not become eligible for any benefit in any country he or she has worked in as the insurance periods are not totalized (i.e.…”