Summary
The Mexican social security system (IMSS) provides a broad range of coverage for retirement, disability, medical care, sickness, occupational injury and maternity. Benefits are typically low, however, and few expatriates access them in practice.
Details
Contributions
The maximum total employer contribution (for employers considered to be low risk) to the three core elements of social security are approx. $12,900 per year. The exact level depends on the industry of the employer. Maximum employee contributions are approx. $1,650 per annum. These contributions apply to individuals with annual income of above $61,000.
Treaties
Mexico has only two social security agreements (with Canada and Spain). The agreement with the US which was signed in 2004 has never come into force. Contributions will therefore be due for most employees moving into Mexico from abroad, and Mexican outbounds will generally be liable to host country social security.
Exemptions
Social Security in Mexico is generally applied to taxable income. Providing individuals with certain tax advantaged allowances (education, medical allowances etc) may therefore generate social security savings.
Administration
All contributions are paid over via monthly payroll for employed individuals.
Benefits
Contributions to the pension element of social security create a personal account balance which can be used to buy annuities at retirement. The personal account can also be accessed in the case of unemployment. If the annuity from the personal account is below the guaranteed state pension, the state funds a supplementary payment if the individual has 850 weeks of contributions (rising to 1000 weeks by 2031) and is over the age of 65.
Other
Social Security contributions may be refundable for those leaving Mexico permanently. The law is still fluid in this area and is based on court decisions in 2020 and 2021 and claims, if allowed at all, may be limited to some geographical areas. Employee contributions to social security are tax deductible.
Social security insights are intended to provide quick and straightforward insights into social security regimes. Always seek professional advice based on actual circumstances before acting.
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