Paraguay Regulates Incorporation of Contracted Public Employees into Pension Fund

President Santiago Peña's administration has taken a significant step towards modernizing public administration and ensuring social security for contracted employees with the recent decree regulating their incorporation into the Fiscal Pension Fund. As reported by ABC Color, this measure, formalized by Decree No. 5919, directly implements Article 84 of Law No. 7445/2025, 'On Public Function and Civil Service.'

This regulation is crucial because it provides clear guidelines for contracted public servants to transition into the formal public pension system. Previously, their contributions might have been fragmented or unclear regarding service calculation. The new decree ensures that their time as contracted employees will be recognized and continuously counted towards their pensionable service once they are officially incorporated, whether through public tender or elected office. This provides much-needed security and clarity for a significant portion of the public workforce.

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The regulation consists of the incorporation of public employees into the Public Sector Pension System, administered by the state portfolio's General Directorate of Pensions and Retirement. The aforementioned decree establishes the guidelines and lines for contracted officials to transition to contributing to the Fiscal Pension Fund, in accordance with Law No. 7445/2025.

From Paraguay's perspective, this is not just an administrative update; it's about fairness and long-term planning. The Ministry of Economy and Finance, through the General Directorate of Pensions and Retirement, is tasked with overseeing this transition. The effective date from the second semester of this year means that employees will need to manage their tax status, such as suspending VAT contributions, to comply. This proactive approach by the government, as detailed in the official report, aims to streamline processes and guarantee that all public servants contribute equitably to the social security system, strengthening its foundation for the future. It reflects a commitment to ensuring that public service translates into tangible long-term benefits for the individuals who serve the nation.

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During the term of the contract, the contracting institution and the public employee must contribute to the social security system assigned to the institution in question. If the same modifies its status to that of a public official, as a result of accessing the position via public tender or by assuming an elective position, they will continue to contribute uninterruptedly to social security, and their seniority in it will be counted from the first contribution made as a public employee.