Summary
The social security system in Panama encompasses insurance programs for pensions, health and industrial accident. It is not a comprehensive social security system, however, and benefit provision is limited. Significant reforms to the system have been introduced which involve raising the retirement age and increasing employer and employee contributions.
Details
Contributions
The contribution rate in Panama is 13.25% for employers and 9.75% for employees, with no cap. There is a further ‘Educational Insurance’ tax charge of 1.5% for employers and 1.25% for employees. In addition, employers are required to pay workers’ compensation insurance, which covers work-related personal injuries and death, at a rate between 1% and 6% of earnings, depending on the industry. The headline rate for employers is due to increase to 15.25% by March 2029.
Treaties
Panama has no international social security agreements. Inbound expatriates who remain employed by their home country employer will therefore usually be liable to Panamanian contributions, as well as (potentially) continued home country contributions.
Exemptions
The base for social security payments is all cash and non-cash (in kind) remuneration. There are few exemptions from social security in Panama.
Administration
Although withheld monthly, social security contributions are paid over to the authorities quarterly, and social security filings with the government are made via an online reporting platform. Panama operates a 13th month payroll structure.
Administratively, organizing foreigners’ participation in Panamanian social security is not overly burdensome.
Benefits
Participation in the social security system in Panama provides only limited benefit entitlements – there are no unemployment benefits, and Healthcare cover is limited to permanent residents and citizens of Panama. Retirement benefits have been reformed significantly since 2025, with a new pension fund (the FUS) replacing two parallel pension programs. Benefits are low and few, if any, foreign nationals claim them as they are limited to residents and citizens.
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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