Paraguay Social Contributions Guide 2026 — IPS 9% EE, 14.5% ER
Paraguay's IPS (Instituto de Previsión Social) mandates social security contributions of 9% for employees and 14.5% for employers, covering pension, health insurance, and labor risk insurance. Coverage extends to most formal-sector workers.
The IPS system provides retirement pensions, health coverage, maternity benefits, disability benefits, and labor accident insurance. All formal employees and their employers must register with IPS and make monthly contributions. The system is funded exclusively through these contributions with no general government subsidy. The contribution cap is approximately PYG 25 million per month.
Example: An employee earning PYG 10M monthly contributes PYG 900,000 (9%) and the employer contributes PYG 1,450,000 (14.5%). Total monthly contribution: PYG 2,350,000.
Contribution Rates
Employee (9%): Pension 5%, Health 4%
Employer (14.5%): Pension 6.5%, Health 8%, Labor Risk Insurance 0.5%
Total combined contribution: 23.5% of gross salary. Contributions are calculated on gross salary up to the maximum contribution cap. Self-employed individuals may voluntarily contribute to IPS at rates covering both portions.
Contribution Cap
The maximum monthly salary base for IPS contributions is approximately PYG 25 million. Earnings above this amount are not subject to IPS contributions. This cap means the maximum monthly employee contribution is PYG 2,250,000 and the maximum employer contribution is PYG 3,625,000.
Coverage and Benefits
- Retirement pension: Available at age 60 (men) or 55 (women) with at least 25 years of contributions
- Health coverage: Access to IPS hospitals, clinics, and medical services for the worker and dependants
- Maternity leave: 18 weeks paid leave funded by IPS
- Disability and survivor benefits: Coverage for work-related and non-work-related disabilities
- Labor accident insurance: Employer-funded 0.5% covers work-related injuries and illnesses
FAQs
Are foreign workers covered by IPS?
Yes. Foreign employees working in Paraguay for a Paraguayan employer must be registered with IPS and contributions are mandatory on the same basis as Paraguayan workers.
Can I opt out of IPS?
No. IPS contributions are mandatory for all formal employees in Paraguay. Opting out is not permitted. Self-employed individuals may choose to contribute voluntarily.
What happens to contributions if I leave Paraguay?
IPS contributions are not portable. However, if Paraguay has a social security agreement with your home country, the contribution period may be recognised. Paraguay has limited bilateral social security agreements.
Disclaimer
This guide is for informational purposes only and does not constitute legal or financial advice. Social security rules are subject to change. Consult IPS directly or a qualified professional for advice specific to your situation.