Technical Standards for the Transfer of Funds Due to the Annulment of Affiliation Contracts in the Pension System

THE COMMITTEE OF STANDARDS OF THE CENTRAL RESERVE BANK OF EL SALVADOR,

CONSIDERING:
I. That by Legislative Decree No. 614, of December 20, 2022, published in Official Diary No. 241, Volume No. 437 of December 21, 2022, the Comprehensive Pension System Law was issued, thereby creating the Pension System for workers in the private, public, and municipal sectors.
II. That Article 4 of the Comprehensive Pension System Law establishes that the Central Reserve Bank of El Salvador, through its Committee of Standards, shall be responsible for issuing the corresponding technical regulations to facilitate the application of said Law.
III. That Article 5 of the Comprehensive Pension System Law defines affiliation as a legal relationship between a natural person and a Pension Fund Administrator, which originates the rights and obligations established by the aforementioned Law, especially the right to benefits that take effect upon the generation of contributions, while the obligation to contribute takes effect from the date of validity of the worker's affiliation contract, when there is a labor relationship. Affiliation may be carried out through electronic means made available by the Administrator to the affiliates. With the first affiliation contract with an Administrator, the person becomes affiliated with the System.
IV. That Article 6 of the Comprehensive Pension System Law provides that all affiliation with the System shall be individual and shall subsist during the life of the affiliate, whether or not they are in active employment, and that every person must choose, individually and freely, the Administrator to which they wish to affiliate by subscribing to a contract and opening an Individual Savings Account for Pension.
V. That the third and seventh paragraphs of Article 6 of the Comprehensive Pension System Law establish that Administrators may not reject the affiliation request of any natural person, if it proceeds in accordance with said Law, and that in no case may the affiliate contribute obligatorily to more than one Administrator.
VI. That Article 159 of the Comprehensive Pension System Law establishes that the Central Reserve Bank of El Salvador will issue the Technical Standards and Resolutions necessary to allow the development of what is established in the present Law.
THEREFORE, by virtue of the regulatory powers conferred by Article 99 of the Law on Supervision and Regulation of the Financial System,

AGREES to issue the following:

TECHNICAL STANDARDS FOR THE TRANSFER OF FUNDS DUE TO THE ANNULMENT OF AFFILIATION CONTRACTS IN THE PENSION SYSTEM

CHAPTER I
OBJECT, SUBJECTS, AND TERMS

Object
Art. 1.- These Standards aim to establish the minimum provisions for the process of fund transfers that Pension Fund Administrators must make to the Pension Institutes or to another Administrator, in the event of an annulment of an affiliation contract in the Pension System.

Subjects
Art. 2.- The subjects obligated to comply with the provisions established in these Standards are the following:
a) Pension Fund Administrators; b) Salvadoran Social Security Institute; and c) Salvadoran Pension Institute.

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) Affiliate: Any person who maintains a relationship with a Pension Fund Administrator, by subscribing to an affiliation contract; b) AFP: Pension Fund Administrator; c) Contributions: Contributions made to the Solidarity Guarantee Account; d) Central Bank: Central Reserve Bank of El Salvador; e) Contract: Affiliation contract with an AFP; f) CGS: Solidarity Guarantee Account; in accordance with Article 119 of the Comprehensive Pension System Law, it is the mechanism that assumes the financing and present and future payment of the Minimum Pension and the obligations corresponding to the Pension Institutes of the Public Pension System, with the objective of giving sustainability to the payment of pensions, in a stable and lifelong manner; g) CIAP: Individual Savings Account for Pension; h) Contributions: Contributions that dependent and independent workers and employers make, as established in the Comprehensive Pension System Law. Contributions made by pensioned affiliates who continue to contribute to the Pension System will also be considered as contributions; i) Identity Document: Refers to the Unique Identity Document, Minor's Card, Passport, or Resident's Card, as applicable;

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
CNBCR-11/2022
NSP-58
TECHNICAL STANDARDS FOR THE TRANSFER OF FUNDS DUE TO THE ANNULMENT OF AFFILIATION CONTRACTS IN THE PENSION SYSTEM Approval: 30/12/2022 Validity: 30/12/2022 j) History: Individual work history of the affiliate or worker; k) IBC: Contribution Base Income; l) Pension Institute: any of the following Institutions: Salvadoran Social Security Institute or Salvadoran Pension Institute; m) Pension Institution: any of the following Institutions: Salvadoran Social Security Institute, Salvadoran Pension Institute, or AFP; n) ISP: Salvadoran Pension Institute; o) ISSS: Salvadoran Social Security Institute; p) SP Law: Comprehensive Pension System Law; q) SP: Pension System; r) SPP: Public Pension System; and s) Superintendency: Superintendency of the Financial System.

CHAPTER II
TRANSFER OF FUNDS FROM AN AFP TO INSTITUTIONS OF THE PUBLIC PENSION SYSTEM

Amount to be delivered by the AFP
Art. 4.- In the case where a contract becomes void, because it was signed by a person who, in accordance with the SP Law, should not have been incorporated into the SP and as a result the worker must be reincorporated into a Pension Institute, the AFP must deliver the values for the following concepts:
a) The balance of the CIAP, according to the number of units valued at the current unit value on the day of the transfer, excluding voluntary contributions and the profitability of these, if they exist, and including at nominal value the contributions made to the CGS; and b) The commissions that corresponded to the AFP; these are excepted from these, the rate for disability and survivorship insurance, in case it has been paid, for the periods prior to the month in which the contract became void, returning the total of the commissions received in the subsequent months.

Procedure for the delivery of funds
Art. 5.- The AFP will remit to the corresponding Pension Institute, no later than the thirteenth business day of the month following the notification of the resolution, the corresponding funds as established in Article 4 of these Standards, along with the forms described in Annex No. 1 thereof, and with a distribution of the copies as follows:
a) The original will be for the AFP; b) A copy for the Pension Institute where the funds will be transferred; and c) A copy for the affiliate.
These forms will serve as proof of payment. The AFP will be responsible for sending the proofs to their respective recipients.

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
CNBCR-11/2022
NSP-58
TECHNICAL STANDARDS FOR THE TRANSFER OF FUNDS DUE TO THE ANNULMENT OF AFFILIATION CONTRACTS IN THE PENSION SYSTEM Approval: 30/12/2022 Validity: 30/12/2022 The procedure described above may be carried out by electronic means. Art. 6.- In the case of voluntary contributions, the AFP must deliver them in the name and account of the worker, by the means made available by the same, which may be electronic, no later than the thirteenth business day of the month following the notification of the resolution, for the value of said voluntary contributions made and their profitability, according to the number of units valued at the current unit value on the date of transfer. The delivery of the funds must be accompanied by the payment proof detailed in Annex No. 2 of these Standards, attending the following indications:
a) The original will be for the AFP, it will serve as proof of payment; and b) A copy for the affiliate.
The procedure described above may be carried out by electronic means.

Procedure for the crediting of contributions and determination of insufficiencies Art. 7.- For the purpose of accrediting the corresponding contributions that have been returned and determining any insufficiencies, if any, the following procedure will be followed:
a) The proof of payment made by the AFP will be equivalent to the presentation of the monthly payroll to the corresponding Pension Institution, which will not cause delay and will be credited to the worker's history; b) The IBC will be the same as reported by the AFP, at the contribution rates that the Pension Institution had in force for each month of accrual, without prejudice to what is stated in letter d) of this article; c) The Pension Institution will calculate the excess and/or insufficiency in the payment of contributions, according to the contribution rates in force in the SPP, for each month of accrual; d) The amount of the insufficiency must be covered by the worker, if they so wish; for this, the Pension Institution will notify the worker according to the format described in Annex No. 3 of these Standards. In the event that the complement is not made, the Pension Institution must adjust the IBC to credit the declared contributions as they were received, even if they were less than the current minimum wage. The Pension Institution may agree on another form of compensation for the insufficiency charged to the affiliate's benefits. The worker must pay the complement in a financial entity, presenting the collection notification mentioned in the previous letter, within a period of fifteen days from receiving the notification of insufficiency, by the means made available by the AFP for this purpose, delivering the corresponding proof to the AFP; e) The payment made within the period indicated in the previous letter must be considered as paid within the legal period established by Article 21 of the SP Law, and credited to the declared period; and f) In the event of excesses or insufficiencies of contribution caused by the employer, the Pension Institution must inform the affiliate about this result, while proceeding to carry out collection or corresponding return procedures, for the net value resulting from comparing the excesses and insufficiencies of contributions.

CHAPTER III
TRANSFER OF FUNDS BETWEEN PENSION FUND ADMINISTRATORS

Amount to be delivered by the corresponding AFP Art. 9.- When a contract becomes void, in the case where an affiliate has subscribed to more than one contract, the AFP in which the affiliate is contributing will deliver to the corresponding AFP the values for the following concepts:
a) The balance of the CIAP composed of mandatory contributions, voluntary contributions made by the affiliate and the employer, if they exist, according to the number of units valued at the current unit value on the day of the transfer; and b) The commissions that corresponded to the AFP; these are excepted from these, the rate for disability and survivorship insurance, in case it has been paid, for the periods prior to the month in which the contract became void, returning the total of the commissions received in the subsequent months. For the case of contributions to the CGS, the AFP must proceed in accordance with what is established in (NSP-44).

Procedure for the delivery of funds
Art. 10.- The AFP will remit to the destination AFP, no later than the thirteenth business day of the month following the notification of the resolution, the value of the components of the CIAP and its profitability, according to the number of units valued at the current unit value on the date of transfer and the commissions, as established in Article 9 of these Standards, along with the forms described in Annex No. 1 thereof, in the following order:
a) The original will be for the AFP; b) A copy for the AFP where the funds will be transferred; and c) A copy for the affiliate.
These forms will serve as proof of payment. The AFP will be responsible for sending the proofs to their respective recipients.
The procedure described above may be carried out by electronic means.

Procedure for the crediting of contributions
Art. 11.- For the purpose of accrediting the corresponding contributions and contributions that have been transferred, the following procedure will be followed:
a) The proof of payment made by the AFP will be equivalent to the presentation of the monthly payroll to the corresponding AFP and will be credited to the worker's history; b) In the event of contribution insufficiencies caused by the employer, the AFP must proceed to carry out collection procedures, in accordance with the provisions of the Technical Standards for the Management of Pension Delay, Omissions, and Inconsistencies of Contributions in the Pension System -55), or the corresponding return, for the net value resulting from comparing the excesses and insufficiencies of contributions; and c) For the purpose of completing the work history of the affiliate, the Superintendency will transfer to the respective AFP the corresponding information, detailed in Annex No. 3 of these Standards.

Review of calculations
Art. 12.- If the worker finds any error or disagreement, they will communicate it to the AFP within ten business days following notification of the payment. The AFP may notify in advance of the payment regarding the contributions to be returned to the current unit value as a preliminary data, from which the period indicated in the previous clause will be counted. Art. 13.- From the date on which observations were received, if any, the AFP will have ten business days to review the indicated information and proceed to make corrections.

CHAPTER IV
OTHER PROVISIONS AND VALIDITY

Sanctions
Art. 14.- Non-compliance with the provisions contained in these Standards will be sanctioned in accordance with what is established in the Law on Supervision and Regulation of the Financial System.

Derogatory
Art. 15.- Technical Standards for the Transfer of Funds by Annulment of Affiliation Contracts in the Pension Savings System -22), approved by the Committee of Standards of the Central Reserve Bank of El Salvador, in Session No. CN-08/2019, of May 24, 2019.

Unforeseen Aspects
Art. 16.- The unforeseen aspects in regulatory matters in these Standards will be resolved by the Central Bank through its Committee of Standards.

Annex No. 1
Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
CNBCR-11/2022
NSP-58
TECHNICAL STANDARDS FOR THE TRANSFER OF FUNDS DUE TO THE ANNULMENT OF AFFILIATION CONTRACTS IN THE PENSION SYSTEM Approval: 30/12/2022 Validity: 30/12/2022 RETURN OF MANDATORY CONTRIBUTIONS WHEN AN AFFILIATION CONTRACT BECOMES VOID The (name of the AFP), delivers on (date), the funds indicated below, in concept of return of mandatory contributions when the affiliation contract No. _______________ becomes void, in the name of _________________________, with Identity Document No. , according to resolution of the Superintendency of the Financial System No. __________________ of date , for the contributions detailed below. In accordance with what is provided in the Technical Standards for the Transfer of Funds by Annulment of Affiliation Contract in the Pension Savings System (NSP-58), the funds have been transferred in favor of the Pension Institution (ISSS/ISP/AFP), according to the balance in force on the date of transfer. This payment does not release the AFP from transferring the funds not included in this document that are perceived or identified subsequently, in favor of the referred affiliate. Date: _________________ Employer Name: ______________________________________________________________ Address: Tel: _____________________ Employee Name: ______________________________________________ Identification Document No: ____________________________ Address:
_______________________________________________________________________________ Affiliation Date: _______________________________ Annulment Date: _______________________ Accrual Periods Contributed Days Worked Contribution Base Income Mandatory Contributions Commission Contributions to the CGS Profitability by Accrual Period Total Totals $ $ $ $ Amount to Transfer $

Annex No. 2
Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
CNBCR-11/2022
NSP-58
TECHNICAL STANDARDS FOR THE TRANSFER OF FUNDS DUE TO THE ANNULMENT OF AFFILIATION CONTRACTS IN THE PENSION SYSTEM Approval: 30/12/2022 Validity: 30/12/2022

RETURN OF VOLUNTARY CONTRIBUTIONS
WHEN AN AFFILIATION CONTRACT BECOMES VOID
The (Name of the AFP), delivers on (Date), the funds indicated below, in concept of return of voluntary contributions when the affiliation contract No. ________, in the name of ___________________________, with Identity Document No. _________________________, according to resolution of the Superintendency of the Financial System No. __________ of date _________________, for the contributions detailed below. This payment does not release the AFP from transferring the funds not included in this document that it has perceived or will perceive subsequently. Date: ___________ Employee Name: ______________________________________________ Identity Document No.: ___________________________ Affiliation Date: _________________________________ Annulment Date: ______________________ Contributed Periods Amount of voluntary contributions made Amount returned

Logo
AFP

Annex No. 3
Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
CNBCR-11/2022
NSP-58
TECHNICAL STANDARDS FOR THE TRANSFER OF FUNDS DUE TO THE ANNULMENT OF AFFILIATION CONTRACTS IN THE PENSION SYSTEM Approval: 30/12/2022 Validity: 30/12/2022 NOTIFICATION OF INSUFFICIENCY AND/OR EXCESS IN THE PAYMENT OF CONTRIBUTIONS WHEN AN AFFILIATION CONTRACT WITH AN AFP BECOMES VOID Date: __________________ Employer Name: _______________________________________________________________ Address: __________________________________________________ Tel: _______________________ Employee Name: _____________________________________________________________ Affiliation Date: ________________________________ Annulment Date: ______________________ The AFP (Name of the AFP), delivered (date), the amount of US$___________ in concept of return of mandatory contributions when the affiliation contract No. ___________, in the name of ___________________________, with Identification Document No:
______________________, according to resolution of the Superintendency of the Financial System No.
_____________ of date _____________, for the amounts detailed below.
According to the provisions contained in the
NSP-58) issued by the
Central Bank, through its Committee of Standards, the funds have been transferred in favor of the Pension Institution (ISSS/ISP), respecting the contribution rates that these Institutions had in force and the profitability generated. However, the returned funds, in some accrual periods, do not manage to cover the contributions and in others present an excess in the (ISSS/ISP), based on the contribution rates that these receive; therefore, the net value to be paid by the worker or to be returned by the Institute has been established, in order to maintain their level of contributable income, as follows:
Accrual Periods
Contributed
Days
Worked
IBC
Contribution
Rate
Amount
Transferred by the AFP
(1)
Contribution calculated in the
Institute
(2)
Difference ( 1 ) - ( 2 )
Value in
Excess
(3)
Value
Insufficiency
(4)
Totals $ $XXXXX ($XXXXX)
Net value to be paid by the worker (3 < 4)
$ ($XXXXX)
Net Value to
Be Returned by the
Institute
(3 > 4)
$XXXXX

Signature and seal (ISSS/ISP)

Technical Standards for the Transfer of Funds Due to the Annulment of Affiliation Contracts in the Pension System

Lineage: In force