Panama Suspends New Social Security Laws

by Mike Godfrey, Tax-News.com, Washington

11 July 2005

The Panamanian government has suspended the unpopular reform law for the Social Security Fund (CSS) for three months, by decree in the Official Gazette, according to a report by the Latin American News Agency, Prensa Latina.

The plan, which has been bitterly opposed by trade unions and sections of the public, increases the retirement age to 65 years from 62 years for men, to 60 years from 57 years for women, and extends the minimum time required to pay into the fund in order to draw from it when retired to 25 years from 15 years. The changes will also require the self-employed and small business owners to contribute 13% of their gross income to the social security fund.

The administration of President Martin Torrijos has argued that the social security reforms are necessary to prevent a collapse in the system within the next few years.

The National Front for Social Security Defense (FRENADESSO) has galvanised opposition to the proposals, organizing a recent wave of stoppages and street protests in defiance of the government's plan. However, last Tuesday, Andres Rodriguez, coordinator of FRENADESSO pledged that he and his organisation would participate in talks with the government to try to resolve the crisis.

The Torrijos administration is claiming that the reforms will make the retirement fund solvent for at least 40 years. However, an analysis by the National Private Enterprise Council (CoNEP) has concluded that the reforms will fix the system for only 15 years.

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