In conformity with section 233(c)(1)(C) of the Act, Article 8.3 provides that where entitlement to a U.S. benefit is based on combined U.S. and U.K. coverage, the amount of the benefit will be proportional to the amount of coverage credited under the U.S. system.   As stipulated in Article 8.1, persons who qualify for U.S. benefits based on their U.S. coverage alone are not eligible for totalization benefits from the United States.

The language of Article 8.3 is broad enough to encompass any benefit computation method provided for in regulations promulgated in conformance with section 233 of the Act.  The regulation under which the first three U.S. social security agreements were implemented provided that, when entitlement was established based on totalized credits, the amount of the benefit was determined by combining earnings records from both countries to compute a theoretical U.S. benefit, which was then prorated to establish a partial benefit based on the ratio of periods of coverage completed in the United States to the total periods completed in both countries. 

Experience in implementing those earlier agreements showed that using foreign earnings information to compute U.S. benefit amounts was cumbersome for both the United States and the other country.  The time required to secure foreign earnings records exceeded a year in some cases, which caused long delays in adjudicating U.S. totalization claims. 

To avoid the problems created by using foreign earnings data, SSA developed a new method of computing U.S. totalization benefits within the parameters of section 233 of the Act.  Under that method, totalization benefit amounts are compute based on periods of coverage and earnings credited exclusively under U.S. law.  SSA decided to apply the new computation method under the U.S.-U.K. agreement and other subsequent agreements rather than the method employed under the agreements in force before the U.S.-U.K. agreement.  A Notice of Proposed Rulemaking to revise the then-existing regulation on totalization benefit computation was published in the Federal Register on December 1, 1983 (Vol. 48 No. 232).  The final rule was published in the Federal Register on July 24, 1984 (Vol. 49 No. 29775), well before the U.S.-U.K. Agreement became effective on January 1, 1985.  The Final Rule is codified as an SSA regulation at 20 CFR 404.1918.

The current method shortens processing time and expedites the payment of totalization benefits.  Under this method, the United States computes the theoretical benefit on the basis of a worker’s earnings level during the period he or she was actually covered under U.S. Social Security.  The theoretical benefit is then prorated to reflect the proportion of a coverage lifetime actually completed under the U.S. program.  A coverage lifetime is defined in the regulations as the number of the worker’s benefit computation years, i.e., the years that must be used in determining a worker’s average earnings under the regular U.S. national computation method. 

Under the current method, the theoretical benefit will approximate the benefit amount to which the worker would have been entitled had he or she worked a full coverage lifetime under the U.S. system at the same relative earnings level as during his or her actual periods of U.S. coverage.  The pro rata benefit that is payable reflects the portion of the worker’s coverage lifetime spent under the U.S. system.  The new method is comparable to the computation methods used by most European countries, which compute totalization benefits based only on earnings credited under their own social security systems.