Like social programs in most countries, Panama's S.S. is in trouble. It is under funded and of course over used. This is an interesting article from La Prensa that provides the details of what is collected and what it is to go towards. Panama's S.S. also includes socialized medicine which by all accounts is poorly administered (See artcle following the one below on just this situation).
Unlike the U.S. at least the monies collected are used or are put into bonds, but those bonds are susceptible to the economy which adds additional risk beyond just plain being under funded. This week there is an increase to the employee of 1% and employer .25% but as the article points out, it is not nearly enough to meet the shortfall. The only solution is to make significant changes in the program such as later retirement age and what is covered under health care as well as a private management of the funds in a more secure fashion, but any changes meets stiff resistance from labor unions. Sounds familiar doesn't it?
Machine translated from La Prensa;
From now governs the further increase in labor-management fee, which will help fund programs for disability, old age and death (IVM) and Sickness and Maternity (E & M) of the Social Security Fund (CSS).
This increase, which is one of the four listed in the CSS Act which was amended in 2005 (Act 51), means that employees will pay for both programs one percentage point, while employers will assume an increase of 0.25 points percentage.
Employees pay from now 9% (8.50% for IVM and 0.50% for E & M) and employers 12% (4% for IVM and 8% for MS).
José Raúl Varela, Director of National Income from the entity, explained that the total contributed by the workers-more than a million contributors, 100 000, 95% goes to save their pensions.
Cesar Garcia, Director of Finance of the CSS, said that gives relief to the IVM program, according to the actuarial study for 2009, currently has a deficit of $ 64 million.
Although the staggered increases the employers contribution from 2006-when it was established in 18.25% and will be brought up to 21% in 2011 - intended to reduce the financial crisis facing the IVM program, the hole continues to deepen and the pension system remains at risk.
In 2005 it was projected that the deficit of the IVM for 2010 would be around 100 million U.S. dollars, but estimates of the CSS director, Guillermo Sáez-Llorens, indicate that this figure will reach 150 million U.S. dollars.
The president of the National Association of Economists, Raul Moreira, stressed that the CSS you need to make investments that generate additional resources necessary to fund the IVM.
Moreira believes that the Government's decision to redeem the investment so early that he had made in bonds of the Fund meant significant savings for the central government, but a serious blow to the finances of social security in times when more is required of these resources.
The economist believes that increasing the quota represents an important contribution to financing the program, but not sufficient, considering that many people who are retiring now failed to provide sufficient amount in comparison with the level of inflation that affects country today.
A contributor who earns $ 500
Example No. 1.
John Doe earns $ 500 a month and with the further increase in labor-management fee will be deducted from your salary to 9% in social insurance. This represents $ 45. This contribution will be sent to programs for disability, old age and death (IVM) and Sickness and Maternity (E & M). A total of 42 dollars and 50 cents will go to IVM (8.50%), while 2 dollars and 50 cents will go to the E & M (0.50%).
An insured person who earns $ 1.000
Example 2.
Maria Fabrega earn $ 1.000 monthly and with the further increase in labor-management fee will be deducted from your salary to 9% in social insurance, this will represent $ 90. This contribution will be sent to two programs: the Disability, Old Age and Death (IVM), which gets 8.50% and Sickness and Maternity (E & M) 0.50%. A total of $ 85 will go to the IVM program, while $ 5 will be for E & M (0.50%).
An employee who earns $ 2.500
Example 3.
Vilma Guerrero wins $ 2.500 per month and with the further increase in labor-management fee will be deducted from your salary to 9% in social insurance, this will represent $ 225. This contribution will be sent to programs for disability, old age and death (IVM) and Sickness and Maternity (E & M). A total of 212 dollars and 50 cents will go to IVM (8.50%), while 12 dollars and 50 cents will go to the E & M (0.50%).
Continue reading "The status of Social Security in Panama" »



Unable to attract qualified Panamanian medical personnel has forced the ministry of health to bend their rules to allow foreigners to administer medical procedures in the country. Of course this only applies to government health care facilities, which is probably why they are not able to attract many Panamanian health care professionals. They obviously are not paying enough! So one has to wonder about the quality of the doctors that this situation will attract. 
With health care at the center of attention in the U.S. this concept could certainly gain ground if implemented properly. According the an article in
treatments of various kinds is growing dramatically and expected to increase due to the state of the U.S. health care system. My contacts in the medical field here in Panama echo these beliefs as they have seen a growing number of North Americans coming for various treatments which are much lower in cost than their home country. A recent trip I made to Costa Rica showed me just how advanced they are in this form of tourism. The small hotel I stayed in had folks sitting around the breakfast table talking about the various treatments they had come to receive. With Panama having a Johns Hopkins affiliated facility along with a number of top quality practitioners, I think that this is one aspect of tourism that can whether just about any economic storm.
They will have to tax a lot more than just elective cosmetic surgery in order to pay down the debts being incurred, but at least it may help Panama. Come on down!




