PANAMA Trends and Developments Contributed by: Rafael Rivera, Malvis Mina, Nicole Pérez and Carolina Lino, BDO Panama
Reforms to the Social Security Law in Panama General Context
Transition and Enrolment As of 2032, all insured individuals under the mixed system will be automatically transferred to the Single Capitalization System with Solidarity Guarantee. However, those who wish to volun - tarily switch to this system may do so from the date the Law comes into effect. Increase in Employer Contributions The Law establishes a progressive increase in the employer contribution rate, rising from the current 10.25% to 15.25% by 2029. The increase will be implemented in three phases: • from 1 April 2025 to 28 February 2027: 13.25%; • from 1 March 2027 to 28 February 2029: 14.25% and; • as of 1 March 2029: 15.25%. This adjustment aims to strengthen the financial position of the system without imposing sudden burdens on employers. Sanctions and Enforcement Penalties for non-compliance have been increased. Fines for false statements or omis - sions range from PAB1,000 to PAB30,000. In cases of simulated legal acts or refusal to pro - vide the requested information, fines may reach up to PAB50,000. Other infractions are subject to penalties ranging from PAB500 to PAB25,000. Inclusion of Independent Workers The Law also enhances the regulation of inde - pendent workers, both nationals and foreigners, who have traditionally not contributed voluntar - ily. Those who take advantage of this Law will be included in the Single Capitalization System with Solidarity Guarantee, with a contribution rate of 9.36% for disability, old age, and death
For several years, discussions have been ongo - ing in Panama regarding the necessary amend - ments to the former Organic Law of the Social Security system, with the aim of safeguarding pensions and retirement benefits within the Pan - amanian system. Following these discussions, Law 462 of 2025 was enacted. This socially oriented legislation aims to ensure the sustainability of the pension system by mod - ifying both retirement eligibility requirements and employer obligations. The worker contribution rate is maintained at 9.25%, with a minimum of 240 contributions required to qualify for retire - ment. However, the Law stipulates that the retirement age will be reviewed within six years, generating uncertainty among the population. Despite the significant changes, the retirement age remains unchanged – 57 for women and 62 for men. New Retirement Systems Law 462 maintains three pension schemes: • the Defined Benefit Subsystem; • the Mixed Subsystem; and • the Single Capitalization System with Solidar - ity Guarantee – this new system incorporates both individual capitalisation and non-con - tributory solidarity components, expanding coverage and equity. Under the newly single capitalisation system, a minimum pension benefit of PAB144 is guaran - teed for individuals with between 120 and 240 contributions. For those with at least 240 contri - butions, a solidarity pension benefit of PAB265 is established, subject to specific application rules.
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