Panama has entered a new phase of structural reforms to its social security system with the enactment of Law 462, published in the Official Gazette on March 14, 2025. This legislation introduces significant financial and legal adjustments that directly affect employers and their strategic planning.
Employer Contributions to the IVM Program Increase
Starting in April 2025, companies will be required to gradually increase their contributions to the Disability, Old Age and Death (IVM) program of the Social Security Fund (CSS):
|
Effective Period |
Mandatory Employer Contribution |
|
April 2025 – February 2027 |
13.25% |
|
March 2027 – February 2029 |
14.25% |
| As of March 2029 |
15.25% |
This progressive increase represents a structural change in labor costs for businesses.
Key Legal Implications for Employers
- Mandatory compliance: Noncompliance may lead to surcharges, interest, and coercive collection actions.
- Document updates: It is essential to review employment contracts, handbooks, and internal policies.
- Payroll verification: Contributions must be up to date to avoid sanctions during audits.
- Internal transparency: Employers are advised to inform employees of these changes to maintain a healthy work environment.
Recommended Strategic Actions
- Internal audit of labor and tax compliance
- Budget impact analysis for 2025–2029
- Training for HR and accounting teams
- Payroll system updates
- Legal support for document drafting and validation
What Lies Ahead?
Law 462 is only the first phase of a broader pension system reform. Additional measures are expected, such as:
- Changes to the retirement age
- Reforms to the mixed and solidarity pension schemes
- Promotion of voluntary complementary pension funds
Proactive preparation is essential. Acting now ensures compliance and helps prevent future legal or financial contingencies.
The implementation of Law 462 presents an opportunity for companies to strengthen their legal and financial structures, ensuring sustainable operations and rigorous compliance with employer obligations.
At CENTRAL LAW, we advise both individuals and legal entities on labor regulatory compliance, strategic planning, and risk prevention. We are ready to support our clients with a solid, comprehensive, and regional legal approach tailored to the new demands of Panama’s evolving labor environment.
For more information, contact us: info@central-law.com
Aldemara Jaén Arias
Senior Associate
Panama
