Accounting Manual for Pension Funds

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 1 of 97 CNBCR-11/2022 NSP-40 ACCOUNTING MANUAL FOR PENSION FUNDS Approval: 30/12/2022 Validity: 01/03/2023

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

CONSIDERING: I. That by Legislative Decree No. 614, dated December 20, 2022 and published in the Official Journal No. 241, Volume No. 437 on December 21, 2022, the Comprehensive Pension System Law was approved. II. That article 2, letter g) of the Comprehensive Pension System Law, establishes that each Pension Fund Administrator shall manage a Pension Fund, which shall be constituted by the set of individual savings accounts for pensions and the solidarity guarantee account, and shall be separated from the assets of the Administrator. III. That article 27, first paragraph of the Comprehensive Pension System Law, establishes that Pension Fund Administrators shall be financial pension institutions, whose exclusive purpose shall be to administer a fund that will be called Pension Fund, manage and grant the benefits and benefits established by the aforementioned Law. IV. That article 45 of the Comprehensive Pension System Law establishes that the Central Bank, through its Standards Committee, will issue the corresponding accounting regulations in which the accounting obligations of the Administrators and the pension fund, the accounting principles of mandatory application, and the provisions for the formulation of Financial Statements will be determined. All of this with the objective that the real financial situation of the Administrators is reflected. V. That article 159 of the Comprehensive Pension System Law establishes that the Central Reserve Bank of El Salvador will issue the necessary Technical Standards that allow the development of what is established in the aforementioned Law. VI. That article 99, letter c) of the Law on Supervision and Regulation of the Financial System, establishes that it is the responsibility of the Standards Committee of the Central Reserve Bank to approve the Technical Standards for the elaboration, approval, presentation, and dissemination of Financial Statements and supplementary information of the members of the financial system; the determination of accounting obligations and the principles according to which they must keep their accounting; and the establishment of criteria for the valuation of assets, liabilities, and the creation of provisions and reserves for risks.

THEREFORE,

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 2 of 97 CNBCR-11/2022 NSP-40 ACCOUNTING MANUAL FOR PENSION FUNDS Approval: 30/12/2022 Validity: 01/03/2023 by virtue of the regulatory powers conferred upon it by article 99 of the Law on Supervision and Regulation of the Financial System,

AGREES to issue the following:

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 3 of 97 CNBCR-11/2022 NSP-40 ACCOUNTING MANUAL FOR PENSION FUNDS Approval: 30/12/2022 Validity: 01/03/2023 ACCOUNTING MANUAL FOR PENSION FUNDS

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 4 of 97 CNBCR-11/2022 NSP-40 ACCOUNTING MANUAL FOR PENSION FUNDS Approval: 30/12/2022 Validity: 01/03/2023 CHAPTER I GENERAL PROVISIONS

1. OBJECTIVES 1.1 General Objective To standardize the accounting recording of Pension Fund operations, carried out by the Pension Fund Administrator, to obtain financial statements that reflect the financial situation and results of their management, as an instrument for information analysis and decision-making by the administrators of the entities, the public users of the services provided by Pension Fund Administrators, and other interested parties. 1.2 Specific Objective To have complete, timely, and homogeneous information on the financial and economic situation of Pension Funds that contributes to decision-making by affiliates and public users of the services provided by Pension Fund Administrators.

2. SCOPE The application of the Manual is mandatory for Pension Funds authorized by the Superintendency, for the management of their own operations. When this Manual refers to actions of the Fund, it shall be understood that the one performing them is the Pension Fund Administrator in its capacity as administrator thereof. The Manual consists of the General Provisions, the Chart of Accounts, the Accounting Applications Manual, and the Models of Financial Statements with their Notes.

3. TERMS

a) AFP: Pension Fund Administrators; b) Central Bank: Central Reserve Bank of El Salvador; c) CFT: Transition Financing Certificate; d) CIAP: Individual Savings Account for Pensions; e) COP: Pension Obligations Certificates; f) Fund(s): Pension Fund(s); g) ISP: Salvadoran Institute of Pensions; h) Law: Comprehensive Pension System Law; i) SP: Public Pension System;

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 5 of 97 CNBCR-11/2022 NSP-40 ACCOUNTING MANUAL FOR PENSION FUNDS Approval: 30/12/2022 Validity: 01/03/2023 j) SPP: Public Pension System; k) Superintendency: Superintendency of the Financial System; and l) Securities: Shares, debentures, and other securities.

4. CODIFICATION STRUCTURE The codification structure has been created based on a system of codes and account names that contemplates different levels of classifications, distinguishing the following: Class Identified by the first digit Item Identified by the first two digits Account Identified by the first three digits Sub-account Identified by the first five digits Type of sub-account Identified by the sixth digit Analytical Account Identified from the seventh digit onwards

The codification system established up to the sub-account level uses five (05) digits; at the analytical account level, it uses more than seven digits, complemented by the sixth digit (M), which must always be prefixed when using analytical accounts, established to differentiate accounts by currency type, accounts with valuation, exchange differences, and interest accumulated at the time of purchases. The codes at the sixth digit level must be used as follows: 1 Used for operations in legal tender currency; 2 Used for operations in foreign currency; 3 Used for operations with valuation; 4 Used for operations with exchange difference; and 5 Used for the recording of interest accumulated at the time of purchases of financial investment instruments.

5. CLASSIFICATION OF THE CHART OF ACCOUNTS

The defined classes comprise items, accounts, sub-accounts, and analytical accounts, as established in the respective Chart of Accounts, being the following: Class 100 Asset Class 200 Liability Class 300 Equity Class 600 Commitment Accounts Class 700 Control Accounts

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 6 of 97 CNBCR-11/2022 NSP-40 ACCOUNTING MANUAL FOR PENSION FUNDS Approval: 30/12/2022 Validity: 01/03/2023 The accounts contained in the Chart of Accounts do not constitute authorization to carry out the operations to which they refer; AFPs must adhere to the legal norms, regulations, and instructions issued for such effect. AFPs may not use new accounts or sub-accounts without prior authorization from the Central Bank. However, they may open additional analytical accounts to those established in the Chart of Accounts, with the exception of analytical accounts intended to identify banking entities, stock exchanges, issuers, and others. Regarding investment accounts in securities such as 131, 132, 133, 134, 139, 151, 152, 153, 159, and 715, sub-accounts may be incorporated through the following procedure: a) The AFP will notify the Superintendency and the Standards Committee of the Central Bank that it has acquired titles, detailing the following: i. Name of the issuer; ii. Date of acquisition and settlement; and iii. Characteristics of the issuance. b) Additionally, the AFP will request the Central Bank to assign the code and name of the corresponding sub-account. c) The Central Bank will make the corresponding evaluation and, if the assignment of new sub-accounts is necessary, will notify the AFP and the Superintendency of the code and name of the sub-account added to the Chart of Accounts and the Accounting Applications Manual, for immediate implementation. d) The Financial Regulation Department of the Central Bank will proceed to compile the Manual incorporating the new sub-accounts, publish them on the Central Bank's website, and then communicate them to the AFPs via Circular signed by the Secretary of the Standards Committee of the Central Bank. e) The Financial Regulation Department of the Central Bank will inform the Standards Committee of the Central Bank about the incorporations of the new sub-accounts in the Session following the publication of the added sub-accounts.

6. DESIGNATION AND CODIFICATION OF FINANCIAL SYSTEM INSTITUTIONS AND ENTITIES FROM ABROAD Financial System Institutions and entities from abroad must be identified with the codes presented in the attached table, which will be applied immediately after the last code determined in the Chart of Accounts for the corresponding analytical account.

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 7 of 97 CNBCR-11/2022 NSP-40 ACCOUNTING MANUAL FOR PENSION FUNDS Approval: 30/12/2022 Validity: 01/03/2023 When a new Institution is incorporated, the Superintendency must be consulted to identify the code to be assigned; upon withdrawal of any coded Institution, the corresponding code will be omitted.

FINANCIAL SYSTEM INSTITUTIONS AND FROM ABROAD BANKS INSURANCE AND GUARANTEE COMPANIES Central Reserve Bank of El Salvador 0101 Agrícola Comercial Insurance Company, S. A. 0601 Banco Agrícola, S. A. 0103 Protege Seguros, S.A. 0602 Banco Cuscatlán de El Salvador, S. A. 0104 Seguros Sura, S.A. 0603 Banco Davivienda Salvadoreño, S. A. 0107 MAPFRE La Centro Americana, S. A. 0606 Banco Hipotecario de El Salvador, S. A. 0108 Seguros e Inversiones, S. A. 0608 Citibank, N. A., Branch El Salvador 0109 Seguros del Pacífico, S. A. 0609 Banco de Fomento Agropecuario 0110 Davivienda Commercial Insurance Bolívar, S. A. 0611 Banco Atlántida El Salvador, S. A. 0112 Pan American Life Insurance Company (El Salvador) 0613 Banco Promérica, S. A. 0120 La Central de Seguros y Fianzas, S. A. 0614 Banco de América Central, S. A. 0127 Seguros Futuro, A. C. de R. L. 0615 Banco Abank, S.A. 0130 Atlántida Vida, S.A., Life Insurance 0617 Banco Industrial El Salvador, S. A. 0131 SISA, VIDA, S. A., Life Insurance 0619 Banco Azul de El Salvador, S.A. 0132 Seguros Sura, S.A., Life Insurance 0620 Seguros Abank, S.A., Life Insurance 0622 Quálitas Insurance Company, S. A. 0623 BROKERAGE FIRMS INSURANCE AND GUARANTEE COMPANIES Servicios Generales Bursátiles, S. A. de C. V. 0301 ASSA Insurance Company, S. A. 0624 Hencorp S.A. de C.V. 0302 ASSA VIDA, S. A., Life Insurance 0625

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 8 of 97 CNBCR-11/2022 NSP-40 ACCOUNTING MANUAL FOR PENSION FUNDS Approval: 30/12/2022 Validity: 01/03/2023 Valores Banagrícola, S. A. de C. V. 0303 Seguros Azul Vida, S. A., Life Insurance 0626 Valores Cuscatlán El Salvador, S. A. de C. V. 0304 Seguros Azul, Insurance Company, S.A. 0627 LAFISE Valores de El Salvador, S. A. de C. V. 0305 Seguros Fedecrédito, S.A. 0628 Cuscatlán SV Inversiones, S.A. de C.V. 0306 Fedecrédito Vida, S.A., Life Insurance 0629 Valores Davivienda El Salvador, S. A. de C. V. 0307 Atlántida Securities, S. A., Brokerage Firm 0308 Sysvalores, S. A. de C. V. 0309 Valores Azul, S.A. de C.V. 0318 STOCK EXCHANGES Stock Exchange of El Salvador, S. A. de C. V. 0401 SECURITIES DEPOSIT AND CUSTODY Central Securities Depository, S. A. de C.V. (CEDEVAL, S. A. de C. V.) 0501 ENTITIES FROM ABROAD FOREIGN BANKS The Bank of New York Mellon 0701

In the case that an AFP expresses interest to the Superintendency in carrying out financial operations with a new national financial system institution or an entity from abroad that is duly registered in the Registry kept by the Superintendency for such effects, new codes will be incorporated into the previous table using the following procedure: a) The AFP will notify the Superintendency and the Standards Committee of the Central Bank that it will carry out financial operations with a new institution, detailing the following: i. Name of the institution; and ii. Characteristic of the operation to be carried out. b) Additionally, the AFP will request the Superintendency to assign the corresponding code and name.

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 9 of 97 CNBCR-11/2022 NSP-40 ACCOUNTING MANUAL FOR PENSION FUNDS Approval: 30/12/2022 Validity: 01/03/2023 c) The Financial Regulation Department of the Central Bank, once received the notification from the Superintendency, will proceed to compile the Manual with the new assigned codes, publish it on the Central Bank's website, and communicate it to the AFPs via Circular signed by the Secretary of the Standards Committee of the Central Bank. d) The Financial Regulation Department of the Central Bank will inform the Standards Committee of the Central Bank about the incorporations in the Session following the publication of the added modifications.

7. ACCOUNTING RECORDS AND FILES 7.1 Recording, archiving, accounting documentation, and legalization of accounting books The movement and balance of accounts will be recorded in the main books and that of sub-accounts in auxiliary books as considered necessary. The main books that must be legalized are those indicated by the Code of Commerce. Accounting records must comply with what is established in Title II, of Book Two, of the Code of Commerce, insofar as applicable.

7.2 Financial Statements The economic and accounting period shall comprise from January 1 to December 31 of each year. The Fund must prepare Financial Statements on March 31, June 30, September 30, and December 31 of each year, as well as the trial balance and its auxiliaries, which reflect the accounting movements of the Pension Fund. Additionally, the following minimum auxiliary records must be established according to the nature of the Fund: a) Statements of individual accounts of affiliates; b) Auxiliary records of investment movements; c) Auxiliary records of contribution delinquency; and d) Others as considered necessary. For the Funds, the AFPs must elaborate and maintain the necessary auxiliaries that allow adequate information, taking the necessary precautions to be able to generate all financial and analytical reports at any time. A copy of the balance files must remain at the entity's disposal for the Superintendency.

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 10 of 97 CNBCR-11/2022 NSP-40 ACCOUNTING MANUAL FOR PENSION FUNDS Approval: 30/12/2022 Validity: 01/03/2023 7.3 Presentation and Publication of Financial Statements The basic financial statements of the Fund are: Balance Sheet, Statement of Cash Flows, Statement of Changes in Equity, and the Notes to the Financial Statements, which are the only valid ones for all purposes, whether for the approval of the General Shareholders' Meeting; inclusion in the annual report, the publication referred to in article 46 of the Law, or for any other type of dissemination in the country or abroad. AFPs must hire the services of an Independent External Auditor to examine the Fund's financial statements, in accordance with the Technical Standards for the Registration of External Auditors of Members of the Financial System (NRP-16) and the Technical Standards for the Provision of External Audit Services (NRP-18) approved by the Central Bank through its Standards Committee. The basic financial statements of the Fund must contain the signatures of the Comptroller General, the General Manager or Financial Director or their proxy, and the President or legal representative of the AFP. (6) The signatures must be identified regarding the persons to whom they belong and their corresponding positions, considering that they imply the declaration that the information contained in the documents signed has been extracted from the legal and auxiliary books of the entity and verified for accuracy and integrity. In addition to the above, quarterly financial statements must be signed by the external auditor. Financial statements must be published with the following frequency and deadlines: Period to Maximum publication deadline June 30 Within 30 calendar days following the indicated date December 31 Within 60 calendar days following the indicated date

Additionally, the external auditor's report must be published along with the financial statements and their notes for each period, and with an opinion, the one referred to on December 31 of each year, as established in article 46 of the Law.

7.4 Annual Report

The closing financial statements of the economic and management period of the Fund must be included in the annual report to be presented at the General Shareholders' Meeting for approval, taking into account the following procedures: a) The Board of Directors of each AFP must annually prepare the report to submit it to the General Shareholders' Meeting for approval within sixty days following the closing of the fiscal year;

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 11 of 97 CNBCR-11/2022 NSP-40 ACCOUNTING MANUAL FOR PENSION FUNDS Approval: 30/12/2022 Validity: 01/03/2023 b) The report must be available to shareholders along with supporting documents, at least ten days in advance of the holding of the General Shareholders' Meeting; c) In addition to what is stated in the Code of Commerce, the report must contain the external auditor's opinion on the financial statements; d) The report must be presented in such a way as to clearly reflect the financial and administrative situation of the Fund, as well as the results obtained in the past, present, and its projections according to the entity's experience, making a summarized evaluation of each of the most important items, so as to allow the shareholder to have a clear image of the management carried out by the AFP in the administered Fund; and e) The content of the report will be analyzed by the Superintendency after its approval. For this purpose, the AFPs will present it within the deadline provided in letter a) of this section.

7.5 Presentation of Financial Statements to the Superintendency AFPs must present to the Superintendency the financial statements of the administered Fund, duly approved, in the formats, deadlines, periodicity, and under the grouping standards established in this Manual. The financial statements presented to the Superintendency must be considered and approved as follows: a) those referred to at the end of each quarter, by the Board of Directors of the AFP; and b) those referred to on December 31, by the Ordinary General Meeting of Shareholders in the first meeting held after their presentation, attaching the certification of the minutes of said meeting. In case of observations, these must be reported immediately to the Superintendency. The trial balance to be presented to the Superintendency must contain the balances at the level of the accounts included in the Chart of Accounts according to what is established in this Manual, including additional analytical accounts and their movements. AFPs will present to the Superintendency the financial statements and information in a comparative manner, with the frequency and deadlines detailed below: Financial Information Frequency Monthly Quarterly Semi-annually Annual Trial Balance x Balance Sheet x Statement of Changes in Equity x

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 12 of 97 CNBCR-11/2022 NSP-40 ACCOUNTING MANUAL FOR PENSION FUNDS Approval: 30/12/2022 Validity: 01/03/2023 Financial Information Frequency Statement of Cash Flows x Notes to the Financial Statements x Interim Report of External Auditor x x Opinion of External Auditor x

The presentation to the Superintendency of the detailed financial information mentioned above will be made according to the following deadlines: Information Maximum presentation deadlines Monthly Within the first 7 business days of the following month. (6) Quarterly (With report) Within the first 15 business days of the month following the end of the corresponding quarter. (6) Annual (December 31 and without opinion) Within the first 15 business days of the month of January. (6) Annual (December 31 and with opinion) Within the first 10 business days of the month of February. (6) Annual (December 31 and with authorization of the General Shareholders' Meeting) Within the first 15 business days of the month of February. (6)

CHAPTER II CHART OF ACCOUNTS The Chart of Accounts to be used is presented in the Annex of this Accounting Manual, in which the codes and descriptions are detailed.

CHAPTER III ACCOUNTING APPLICATIONS MANUAL SECTION 1 ACCOUNTING APPLICATIONS MANUAL OF ASSETS

Class 100.00 ASSET DESCRIPTION: Groups the accounts representing available money maintained in bank deposits, rights expected to be converted into cash, and investments in securities. Item 110.00 AVAILABLE

DESCRIPTION:

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