Law No. 87-01 Creating the Dominican Social Security System

i SECRETARIAT OF STATE FOR LABOR NATIONAL SOCIAL SECURITY COUNCIL Law No. 87-01 that creates The Dominican System of Social Security Promulgated on May 9, 2001 Santo Domingo, Dominican Republic 2001 Official Edition

Law 87-01 creating the Dominican Social Security System ii INDEX Presentation........................................................................................... vii BOOK I CHARACTERISTICS OF THE DOMINICAN SOCIAL SECURITY SYSTEM............................................. 3 CHAPTER I GENERAL PRINCIPLES ........................................................................................................ 3 Art. 1.- Purpose of the law...................................................................................................................... 3 Art. 2.- Regulatory norms of the Dominican Social Security System..................................... 3 Art. 3.- Guiding principles of social security .............................................................................4 Art. 4.- Rights and duties of affiliates...................................................................................... 4 CHAPTER II BENEFICIARIES, BENEFITS AND AFFILIATION ............................................................. 5 Art. 5.- Beneficiaries of the system....................................................................................................... 5 Art. 6.- Basic education on social security ............................................................................. 6 Art. 7.- Financing regimes of the SDSS .............................................................................. 6 Art. 8.- Graduality of the Subsidized and Subsidized Contributory Regimes................................ 7 Art. 9.- Benefits of the Contributory Regime ................................................................................ 7 Art. 10.- Benefits of the Subsidized and Subsidized Contributory Regimes............................. 8 Art. 11.- Unique affiliation and information system ........................................................................... 8 Art. 12.- Registration of affiliates................................................................................................... 8 CHAPTER III FINANCING, CONTRIBUTION AND SUBSIDIES............................................................... 9 Art. 13.- Financing of the Contributory Regime........................................................................... 9 Art. 14.- Employer and worker contribution.......................................................................... 9 Art. 15.- Tax exemption............................................................................................................. 9 Art. 16.- Deadline for employers to pay contributions............................................... 9 Art. 17.- Contribution base............................................................................................................. 10 Art. 18.- National minimum wage .................................................................................................... 10 Art. 19.- Financing of the Subsidized and Subsidized Contributory regimes......................... 10 Art. 20.- State financing sources..................................................................................... 10 CHAPTER IV DIRECTION, REGULATION AND ADMINISTRATION ......................................................... 11 Art. 21.- Organization of the System.................................................................................................. 11 Art. 22.- Functions of the National Social Security Council...................................................... 12 Art. 23.- Integration of the National Social Security Council .................................................... 13 Art. 24.- Sessions of the National Social Security Council ....................................................... 14 Art. 25.- Comptroller General .............................................................................................................. 14 Art. 26.- General Manager of the CNSS ............................................................................................... 14 Art. 27.- Conditions to be General Manager or Deputy General Manager...................................................... 15 Art. 28.- Treasury and Social Security Information System ............................................ 15 Art. 29.- Information and Affiliate Defense Directorate (DIDA) ............................................ 16 CHAPTER V COLLECTION, PROVISION AND SUPERVISION........................................................................... 16 Art. 30.- Collection, Distribution and Payment System ........................................................................ 16 Art. 31.- Plural nature of the administration and provision of services...................................... 17 Art. 32.- Superintendencies of Pensions and of Health and Occupational Risks.................................. 18 CHAPTER VI TRANSITION PERIOD............................................................................................... 18 Art. 33.- Purpose of the transition period.................................................................................... 18 Art. 34.- Technical assistance during the transition ............................................................................ 18

Law 87-01 creating the Dominican Social Security System iii BOOK II OLD AGE, DISABILITY AND SURVIVORSHIP INSURANCE ............................................ 19 CHAPTER I PURPOSE OF THE INSURANCE...................................................................................................... 19 Art. 35.- Purpose ........................................................................................................................ 19 CHAPTER II PENSIONS OF THE CONTRIBUTORY REGIME.................................................................... 19 Art. 36.- Affiliation to the Contributory Pension System ................................................................... 19 Art. 37.- Affiliation of Dominican citizens residing abroad....................................... 19 Art. 38.- Affiliates who remain in the current system ................................................................ 20 Art. 39.- Affiliates who enter the new Pension System.................................................... 20 Art. 40.- Affiliates to other existing pension plans.............................................................. 20 Art. 41.- Existing pension funds....................................................................................... 21 Art. 42.- Actuarial debt of the IDSS .................................................................................................. 21 Art. 43.- Recognition of acquired rights..................................................................... 22 Art. 44.- Benefits of the Contributory Regime................................................................................. 23 Art. 45.- Old age pension .............................................................................................................. 23 Art. 46.- Disability pension, total or partial.......................................................................... 23 Art. 47.- Amount of total and partial disability pension........................................................ 24 Art. 48.- Technical Commission on disability.............................................................................. 24 Art. 49.- Composition of the National and Regional Medical Commission ............................................... 24 Art. 50.- Old age unemployment pension......................................................................... 25 Art. 51.- Survivors pension................................................................................................. 25 Art. 52.- Loss of survivors pension ...................................................................................... 26 Art. 53.- Minimum pension amount of the Contributory Regime.................................................... 26 Art. 54.- Pension modalities.................................................................................................... 26 Art. 55.- Authorization and supervision of insurance companies ............................................... 26 Art. 56.- Cost and financing of the Contributory Regime............................................................. 27 Art. 57.- Maximum and minimum limit of the contributable salary................................................................... 27 Art. 58.- Incompatibility of pension and unemployment due to retirement or withdrawal ....................... 27 Art. 59.- Affiliate's personal account.............................................................................................. 28 Art. 60.- Social Solidarity Fund.............................................................................................. 28 Art. 61.- Employer's solidarity contribution.......................................................................................... 28 Art. 62.- The employer as a withholding agent........................................................................... 28 CHAPTER III PENSIONS OF THE SUBSIDIZED REGIME ..................................................................... 29 Art. 63.- Beneficiaries of the solidarity pension ................................................................................. 29 Art. 64.- Benefits of the Subsidized Regime.................................................................................. 29 Art. 65.- Amount of the solidarity pension........................................................................................ 29 Art. 66.- Survivors pension................................................................................................. 30 Art. 67.- Financing source .................................................................................................. 30 Art. 68.- Request, assignment and concession of solidarity pensions ......................................... 30 Art. 69.- Socio-economic evaluation ............................................................................................. 30 Art. 70.- Distribution of pensions............................................................................................ 30 CHAPTER IV PENSIONS OF THE SUBSIDIZED CONTRIBUTORY REGIME ......................................... 31 Art. 71.- Benefits...................................................................................................................... 31 Art. 72.- Old age pension .............................................................................................................. 31 Art. 73.- Disability and survivorship pension ....................................................................... 31 Art. 74.- Minimum pension amount of the Subsidized Contributory Regime................................. 31 Art. 75.- Survivors pension................................................................................................. 31 Art. 76.- Financing of the Subsidized Contributory Regime...................................................... 32 Art. 77.- Incompatibility and sanctions............................................................................................. 32 CHAPTER V SOCIAL SERVICES FOR THE ELDERLY............................................................ 32 Art. 78.- Special programs for older adults.............................................................. 32 Art. 79.- Social services for pensioners and retirees .............................................................. 32 CHAPTER VI PENSION FUND ADMINISTRATORS ........................................................ 33

Law 87-01 creating the Dominican Social Security System iv Art. 80.- Pension Fund Administrators (AFP) ............................................................. 33 Art. 81.- Creation of a public AFP............................................................................................ 33 Art. 82.- Minimum capital of the AFP ................................................................................................ 33 Art. 83.- Independent assets and accounting......................................................................... 34 Art. 84.- Basic records and information.................................................................................... 34 Art. 85.- Liability for damages caused to pension funds ................................... 34 Art. 86.- AFP commissions ..................................................................................................... 34 Art. 87.- On the directors of the AFP ............................................................................................. 35 Art. 88.- Obligations of the directors of the AFP........................................................................ 35 Art. 89.- Prohibited activities for the AFP...................................................................................... 36 Art. 90.- Prohibited operations without express authorization............................................................. 36 Art. 91.- Hiring of pension promoters ....................................................................... 36 Art. 92.- AFP advertising........................................................................................................ 37 Art. 93.- Merger and liquidation of AFP .............................................................................................. 37 Art. 94.- Bankruptcy of an AFP.......................................................................................................... 37 CHAPTER VII INVESTMENT OF PENSION FUNDS ............................................................... 37 Art. 95.- Pension funds ........................................................................................................ 37 Art. 96.- Investments of Pension Fund Administrators (AFP)............................... 38 Art. 97.- Investment in financial instruments............................................................................... 38 Art. 98.- Prohibited and restricted investment areas..................................................................... 38 Art. 99.- Risk classification and investment limit.................................................................... 39 Art. 100.- Administration of several investment portfolios............................................................... 39 Art. 101.- Custody of AFP investments.......................................................................... 39 Art. 102.- Reserve and use of profitability fluctuation.............................................................. 40 Art. 103.- Affiliate's right to minimum profitability ................................................................. 40 Art. 104.- Minimum profitability guarantee account ......................................................................... 40 Art. 105.- Minimum profitability asset guarantee .................................................................. 40 CHAPTER VIII PENSION SUPERINTENDENCY............................................................................ 41 Art. 106.- Guarantee of the Dominican State..................................................................................... 41 Art. 107.- Creation of the Pension Superintendence ............................................................. 41 Art. 108.- Functions of the Pension Superintendence ........................................................... 41 Art. 109.- Of the Pension Superintendent................................................................................. 42 Art. 110.- Functions of the Pension Superintendent................................................................ 42 Art. 111.- Interinstitutional Pension Committee ........................................................................... 43 CHAPTER IX INFRACTIONS AND SANCTIONS .......................................................................................... 44 Art. 112.- General principles and norms ........................................................................................ 44 Art. 113.- Non-compliance with obligations................................................................................. 44 Art. 114.- Competence to impose sanctions............................................................................ 44 Art. 115.- Magnitude of the sanctions .............................................................................................. 45 Art. 116.- Destination of fines, surcharges and interests ................................................................... 45 Art. 117.- Right to appeal........................................................................................................ 45 BOOK III FAMILY HEALTH INSURANCE ........................................................................................ 46 CHAPTER I PURPOSE, RIGHTS AND PROTECTION........................................................................... 46 Art. 118.- Purpose of the Family Health Insurance (FHI) ................................................................ 46 Art. 119.- Risks covered by the Family Health Insurance (FHI)................................................... 46 Art. 120.- Family selection of services................................................................................... 46 Art. 121.- Impediment of monopolistic practices and imbalances ................................................ 46 Art. 122.- Prohibition of concentration of ownership and control.............................................. 47 CHAPTER II BENEFICIARIES AND BENEFITS ..................................................................................... 47 Art. 123.- Beneficiaries of the Contributory Regime........................................................................... 47 Art. 124.- Temporary conservation of the right to health services............................................... 47 Art. 125.- Beneficiaries of the Subsidized Regime............................................................................ 48

Law 87-01 creating the Dominican Social Security System v Art. 126.- Beneficiaries of the Subsidized Contributory Regime........................................................ 48 Art. 127.- Benefits of the Contributory Regime .......................................................................... 48 Art. 128.- Benefits of the Subsidized and Subsidized Contributory Regimes......................... 49 Art. 129.- Basic Health Plan....................................................................................................... 49 Art. 130.- Ambulatory pharmaceutical benefits....................................................................... 49 Art. 131.- Sickness subsidy ................................................................................................ 50 Art. 132.- Maternity subsidy.................................................................................................. 50 Art. 133.- Complementary health plans................................................................................... 50 CHAPTER III CHILD CARE CENTERS..................................................................................................... 50 Art. 134.- Protection of the minor through child care centers ....................................................... 50 Art. 135.- Services of the child care centers................................................................................ 50 Art. 136.- Financing of Child Care Centers ..................................................................... 51 Art. 137.- Functions of CONDEI ................................................................................................... 51 Art. 138.- National Council of Child Care Centers (CONDEI)...................................................... 51 Art. 139.- Supervision of Child Care Centers ......................................................................... 52 CHAPTER IV COST AND FINANCING .............................................................................................. 52 Art. 140.- Cost and financing of the Contributory Regime........................................................... 52 Art. 141.- Elimination of double contribution................................................................................... 53 Art. 142.- Financing of the Subsidized Regime ........................................................................ 53 Art. 143.- Limit of the contributable salary ........................................................................................ 53 Art. 144.- The Employer as a withholding agent ........................................................................ 53 Art. 145.- Employer's liability for damages and losses.................................................. 54 Art. 146.- Financing of the Subsidized Contributory Regime.................................................... 54 Art. 147.- Territorial allocation of resources............................................................................... 54 CHAPTER V RISK ADMINISTRATORS AND NATIONAL HEALTH INSURANCE .................................................................................................................................. 54 Art. 148.- Health Risk Administrators (HRA) ................................................................. 54 Art. 149.- Constitution of the HRAs and the NHI................................................................................. 54 Art. 150.- Minimum requirements to qualify as HRA or NHI .................................................... 55 Art. 151.- Licensing of Health Risk Administrators (HRA)........................................................... 56 Art. 152.- Articulation of care levels............................................................................ 56 Art. 153.- Prior authorization to perform certain acts .................................................... 56 Art. 154.- Financial, technical and administrative autonomy ............................................................... 57 Art. 155.- Hiring of health insurance promoters .......................................................... 57 Art. 156.- Local Health Risk Administrators............................................................... 57 Art. 157.- Composition of local HRAs or NHI ......................................................................... 58 Art. 158.- Intervention in case of irregularity ............................................................................. 58 Art. 159.- National Health Insurance (NHI).................................................................................... 58 CHAPTER VI 59 HEALTH SERVICE PROVIDERS........