If you are reading this, then you probably already know that Panama is widely one of the best retirement destinations in Latin America. And when it comes to Panama residency, the Panama retirement visa (the “Pensionado Visa“) is one of the best options for foreigners fortunate enough to qualify. Not only does it provide a coveted direct path to permanent residency, but it offers a range of benefits such as tax exemptions on the import of a new car and discounts on household goods, airline tickets, and healthcare services. The Pensionado Visa is also one of the most affordable residency programs currently available in Panama.
The requirements to qualify for the Pensionado Visa program are quite specific and clear, but they are also pretty rigid. The list of requirements is recited again and again on numerous websites. And on the surface, it all appears pretty black and white.
But this article will highlight just a few peculiar nuances that potential applicants should be aware of when considering whether and how to qualify for the Pensionado Visa. For immigration lawyers, this is where things get interesting. And for some would-be applicants, these little quirks might be the difference between qualifying for the Pensionado Visa, or not!
The Main Requirements to Qualify for the Pensionado Visa
As numerous Panama immigration lawyer’s websites will tell you, the main requirements to qualify for the Pensionado Visa are as follows:
- The applicant must be the beneficiary of a pension, retirement, or similar plan paying a minimum of $1,000 USD per month; and
- The plan must provide a lifetime benefit.
If you receive a benefit in a different currency, then it should be the equivalent of $1,000 USD. Also, the $1,000 minimum monthly income increases by $250 USD for a spouse + another $250 USD for each additional dependent applying for residency with the primary applicant.
It all seems straightforward enough. But here are a few additional things you should know.
The $1,000 USD Minimum Monthly Income
This one seems particularly straightforward. You either receive the requisite $1,000 USD per month, or you don’t. But there is an interesting exception that offers a little bit of flexibility to this otherwise concrete rule.
More specifically, if you have purchased a real estate property in Panama for at least $100,000 USD, then you can qualify for Panama’s Pensionado Visa based on a lifetime pension, retirement, or similar benefit of just $750 USD per month.
So, let’s say you are receiving a net social security benefit of just $900 USD per month, and you’d like to apply for the Pensionado Visa. One option would be to just wait things out and hope that the annual cost-of-living adjustment (COLA) eventually puts you over the $1,000 USD threshold. But another option is to invest $100,000 USD in Panama real estate and get permanent residency within the next 6 months based on your current social security benefit.
Take a look on Encuentra24 to find PLENTY of investment opportunities above the $100k threshold!
Other Types of Income
Most people tend to think of the income required to qualify for the Pensionado Visa as something like a traditional pension, a military service benefit, or Social Security. But there are other options as well. In fact, the legislation specifically references the possibility of income from a trust, mutual fund, insurance company, banking entity, or other private company.
This is not a loophole. This is purposefully broad language, and it leaves room for other options to qualify for the Panama Pensionado program on something like certain Single Premium Immediate Annuities (SPIAs), or other annuity product with a lifetime income rider.
For example, let’s say you invested $300,000 USD in an annuity with your insurance provider that pays a fixed minimum return of 5% per year. That’s $15,000 per year and $1,250 per month, which is above the $1,000 USD threshold for the Pensionado Visa.
To be clear, an annuity that allows the client to withdraw invested cash would NOT satisfy the lifetime benefit requirement. However, an annuity that pays a fixed minimum return above the threshold and in which the client and company are locked in for life WOULD meet the requirements for the Pensionado Visa.
This is one of our favorites because it offers a relevant solution for people who want to relocate to Panama and who could also benefit from a stable fixed income. If this sounds interesting to you, we can connect you with the some folks on the insurance side as well.
Benefits Letter Does Not Specify “Lifetime Benefit“
This one comes up all the time, and can cause frustration for Pensionado Visa applicants.
Here’s the deal – for you, it probably seems obvious that your Social Security benefit or Canada Pension Plan (CPP) benefits are guaranteed for the rest of your life. But the government official at the Panama immigration office has probably never been to the US or Canada. So, she needs to see the words “lifetime benefit” or “for life” or some similar variation explicitly stated on your benefits letter before she gives a green light on your application.
But more often than not, your benefits letter may be missing this detail. Fortunately, there is an easy workaround!
We can draft a simple 1-page affidavit in which you swear that your Social Security, Veterans Affairs, Canada Pension Plan (CPP), or Old Age Security (OAS) payment constitutes a lifetime benefit. You will sign the affidavit, have it notarized, and then have it apostilled (or authenticated by the Panamanian consulate) in your home country along with the other documents for your application package. And that affidavit will allow the officer at the Panama immigration department to check the “lifetime benefit” box on your permanent residency application.
By the way – this is completely above board. In fact, US clients can even do such an affidavit for their Social Security benefits through the US Embassy here in Panama. The US Embassy is well aware that Social Security provides a lifetime benefit, and they are happy to help clarify things for your Panama residency application!
The Additional Monthly Income Requirement when Applying with a Dependent
As we mentioned earlier, the Pensionado Visa requires that you demonstrate a minimum monthly income of $1,000 USD as a lifetime benefit. But if you are applying with a spouse and/or other dependents, then your monthly benefit should include an additional $250 USD for each dependent family member.
So, let’s say you have a Social Security benefit of $1,100 USD per month. That covers you, but it falls short of the $1,250 USD threshold for your wife to apply as your dependent.
Your benefits fall short, and this seems like a big problem. Your wife is going to be royally pissed off if you relocate to Panama without her!
There are two potential workarounds here:
1. Combining Lifetime Benefits.
First, if your spouse also has a lifetime pension or annuity benefit, then the law allows you to combine your benefits to qualify for the initial $1,000 USD monthly threshold.
That seems counter-intuitive. If a married couple applies based on just one person’s benefit, then the threshold is bumped up to $1,250 USD per month. But if a married couple combines their benefits, then the threshold remains at $1,000 USD per month. But this is what the law says.
For example, let’s say you have a Social Security benefit of $700 USD per month, and your spouse has a lifetime pension income of $350 USD per month. Your combined benefit of $1,050 USD per month allows the two of you to qualify for the Pensionado Visa as a married couple.
2. Opening a Local Bank Account
Second, you can get around the additional $250 USD per month bump-up by simply opening a personal bank account in Panama and depositing $200 USD into the account to demonstrate sufficient “economic solvency”.
This also seems crazy, but the law is very clear on this. If you can produce a reference letter from a local bank saying that you maintain at least $200 USD in your bank account, then you and your spouse can apply for the Pensionado Visa with your lifetime benefit of just $1,000 USD per month.
We can help you open a bank account in Panama before you start your residency application process. Actually, you can open a bank account in Panama without engaging an attorney or any third-party assistance – but this is a service we offer our clients. Check out our article about Opening a Bank Account in Panama.
Applying with a Dependent Child over 18 Years Old
The Pensionado Visa allows you to apply for residency for your minor children. But for retirees with dependent children over the age of 18, the pathway to permanent residency is a little tricky.
If your young adult (over 18) child applies for the Pensionado Visa with you, then you will have to show more than just the child’s birth certificate. You will have to prove that he/she is a full-time student to qualify as your dependent. And then he/she will only be granted residency until they reach age 25.
This sucks – especially if your 18-year-old son or daughter is still living with you as a dependent and would like to get permanent residency with the rest of the family. But there is an easy workaround here as well. Here is how it works:
You will apply for the Pensionado Visa yourself (without your adult son or daughter). The application process takes around 6 months. Once you receive your permanent residency, your adult son or daughter then applies as a “Dependent of a Permanent Resident”.
You will still need to prove that he/she is a full-time student, but this strategy will grant a 2-year legal residency that can then be extended for permanent residency. Based on current legislation, you can employ this strategy until your son or daughter reaches 25 years of age.
Bottom line?
If there is one thing we really enjoy, it is exploring the peculiarities of Panama immigration law. We like to stay ahead of the curve, and we get a lot of satisfaction from helping our clients find a solution when they think they have hit a brick wall.
The Panama Pensionado Visa offers one of the best retirement programs for foreign retirees with some excellent benefits. But there may be more than one way to get to where you want to be. And it may be important to work with an immigration lawyer who understands the nuances of the Pensionado Visa, and who can help you find a practical path to residency that works best for your family.
Do you have questions about whether the Panama Pensioner Visa can work for you? Send us an email at info@theindependentlawyer.com, and let’s explore this together.
