Technical Standards for the Implementation of the Single Payroll in the Pension System

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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 8 CNBCR-03/2023 NSP-84 TECHNICAL STANDARDS FOR THE IMPLEMENTATION OF THE SINGLE PAYROLL IN THE PENSION SYSTEM Approval: 03/05/2023 Validity: 19/05/2023

THE NORMS COMMITTEE 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 Diary No. 241, Volume No. 437 on December 21, 2022, the Comprehensive Law of the Pension System was approved. II. That Article 1, in its first clause, of the Comprehensive Law of the Pension System, establishes that the Pension System is created for workers in the private, public, and municipal sectors, hereinafter referred to as the System, which shall be subject to the regulation, coordination, and management of the State, in accordance with the provisions of said Law. III. That Article 21, in its fourth clause, establishes that all employers must prepare and transmit the payroll for the declaration of social security contributions and the employer-employee contribution payroll of the Regime for Illness, Maternity, and Occupational Risks of the Salvadoran Social Security Institute by electronic means; this payroll must contain the requirements established by the Superintendence of the Financial System. IV. That Article 21, in its fifth clause of the Comprehensive Law of the Pension System, establishes that Pension Fund Administrators and the Salvadoran Social Security Institute must transmit in real time to the Superintendence of the Financial System the database of their affiliates and employers, which must centralize the information in a single database, serving as the basis for prior consultation and generation of the respective payrolls, with the objective that the information contained in the social security contribution payrolls and employer-employee contribution payrolls be consistent with each other. V. That Article 21, in its sixth and seventh clauses of the Comprehensive Law of the Pension System, establishes that the Superintendence of the Financial System shall ensure that the unique database of affiliates and employers is kept updated, and that each Pension Fund Administrator must inform the Superintendence of the Financial System and the Salvadoran Pension Institute about non-compliance with the provisions of said article, so that this body proceeds to impose the respective sanctions in accordance with the referred Law. VI. That Article 27, in its third clause of the Comprehensive Law of the Pension System, establishes that Administrators, in the fulfillment of their functions, shall collect the corresponding contributions and payments, and credit them to the respective individual savings accounts for pensions.

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 8 CNBCR-03/2023 NSP-84 TECHNICAL STANDARDS FOR THE IMPLEMENTATION OF THE SINGLE PAYROLL IN THE PENSION SYSTEM Approval: 03/05/2023 Validity: 19/05/2023

VII. That Article 27, in its fourth clause of the Comprehensive Law of the Pension System, establishes that, for the collection of contributions and payments, a mechanism for a single payroll of contributions to the pension fund and to social security must be created; the Norms Committee of the Central Reserve Bank shall issue the technical standard for the design and implementation of the system that allows for the establishment of the single payroll. VIII. That Article 159 of the Comprehensive Law of the Pension System establishes that the Central Reserve Bank of El Salvador shall issue the Technical Standards necessary to allow for the development of what is established in the referred Law. IX. That with the objective of collecting affiliate information in a single database processed through a computer system, so that from this it is possible to consult, process, and generate the necessary payrolls for contributions to the pension fund and to social security in the pension system, with the effect of guaranteeing compliance with social security and health obligations by employers, it is necessary to regulate the implementation of a single payroll.

THEREFORE,

in 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 IMPLEMENTATION OF THE SINGLE PAYROLL IN THE PENSION SYSTEM

CHAPTER I OBJECTIVE, SUBJECTS, AND TERMS

Objective Art. 1.- These Norms have as their objective to establish the minimum guidelines that must be complied with for the implementation of the Single Payroll System for contributions to the pension fund and to social security in the pension system of El Salvador.

Subjects Art. 2.- The subjects obliged to comply with the provisions established in these Norms are: a) Pension Fund Administrators; b) The Salvadoran Pension Institute; c) The Salvadoran Social Security Institute; and d) Financial entities that provide their services to Pension Fund Administrators, regarding the management of current accounts owned by the Pension Fund that they administer.

Terms Art. 3.- For the purposes of these Norms, the terms indicated below have the following meaning: a) Affiliates: Refers to pensioners and non-pensioners of the social security system and those included in the health and occupational risk regime of the Salvadoran Social Security Institute; b) AFP: Pension Fund Administrator; c) Central Bank: Central Reserve Bank of El Salvador; d) Centralized database: Set of information collected, ordered, structured, and stored on a central server. This database will contain all and each of the information records of non-pensioned and pensioned affiliates in the AFPs, affiliates of the Salvadoran Social Security Institute, and employers in the public and private sectors; e) Employer(s): Refers to the employer in the private sector as well as institutions of the Central Government, Decentralized Institutions, Autonomous entities, municipalities, and institutions of the financial public sector and others with special budgetary regimes; f) Entity(ies): Subjects obliged to comply with these Norms, according to Article 2 thereof; g) Unique identifier: For natural persons, it will be the Unique Identity Document (DUI); for legal entities, the Tax Identification Number (NIT); for minors, the minor's card; and for foreigners, the passport or resident card; (1) h) Social Security Institutes: Refers to Pension Fund Administrators, Salvadoran Pension Institute, Salvadoran Social Security Institute, and the Pension Unit of the Salvadoran Social Security Institute; i) Accrual Month: Period in which deductions are made from the worker subject to remuneration for the payment of contributions to the pension fund and to social security, corresponding to the month prior to the declaration and payment thereof; j) ISP: Salvadoran Pension Institute; k) ISSS: Salvadoran Social Security Institute regarding the health and occupational risk regime; l) Single Payroll System (SPU): Mechanism by which employers can prepare, declare, and generate receipts for the payment of contributions to the pension fund and to social security in the pension system of El Salvador; m) Superintendence: Superintendence of the Financial System; n) UPISSS: Pension Unit of the Salvadoran Social Security Institute; and o) User: Identifier for access corresponding to the Single Payroll System, which may be the DUI or NIT, depending on whether it is a natural or legal person, according to the type of employer.

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CHAPTER II ON THE CENTRALIZED DATABASE AND THE SINGLE PAYROLL SYSTEM

On the centralized database of affiliates and employers Art. 4.- The Superintendence will manage a unique database that will guarantee the consistency and integrity of the data, which will contain the unified information of all affiliates and employers registered in the AFPs, ISSS, UPISSS, and ISP as well as in the Superintendence.

Single Payroll System Art. 5.- The Superintendence will develop, implement, and manage a single payroll system through which employers will prepare and declare the payrolls of the pension system and the ISSS. This system will serve to determine the amount of contributions and generate the payment obligation based on the presentation of declarations. All contributions to the pension system and the ISSS must be declared through the single payroll system; therefore, for dependent workers, employers must keep the data of said workers updated in the SPU. Collecting institutions must inform, daily or in real time, to the Superintendence through the technical mechanisms established by it, the payment of the payrolls generated through the SPU, reporting the information established in Annex No. 1 of these Norms. The Superintendence will share with the ISP the necessary information so that said Institute executes auditing and control activities with the aim that all subjects subject to the compliance of declaration and payment obligations of contributions, of any type, comply with them in a timely manner. The mechanisms through which the information will be shared will be defined by the Superintendence in coordination with the ISP.

On the unique identifier in the SPU Art. 6.- The Single Payroll System, for the consultation of affiliates and preparation of the respective social security and employer-employee payrolls, must contemplate a unique identifier, which will be unique for each of the affiliates registered in the centralized database, regardless of whether they are minors, Salvadoran citizens, or foreigners.

Single Payroll Art. 7.- The Single Payroll System will be a mechanism that facilitates for employers the preparation of any type of payroll in a single manner and that is necessary for the declaration of contributions to the pension fund and to social security in the pension system of El Salvador, within the deadline and according to the accrual month that corresponds.

Validations or controls in the SPU Art. 8.- For the purposes that employers can prepare any type of social security payroll correctly and efficiently in the SPU, the necessary validations or respective controls must be configured for each type of social security payroll within said System, in such a way that employers can declare contributions to the pension fund and to social security according to the social security conditions of the affiliate at the time of processing said payroll.

CHAPTER III ON THE MANUALS AND USERS OF THE SINGLE PAYROLL SYSTEM

On the manuals and users of the SPU Art. 9.- The Superintendence will manage users with their corresponding roles to access the SPU for the preparation of social security and employer-employee payrolls. Art. 10.- Employers, with the objective of carrying out the declarations of social security and employer-employee payrolls, must request from the Superintendence to electronically register their company or business; for this, they must complete the fields required in the respective forms. Art. 11.- Once the corresponding registration has been made, employers can access the SPU through users and their access credentials, with the purpose that they can consult information about their employees and prepare, declare, and pay the respective social security and employer-employee payrolls. Art. 12.- The creation and management of SPU users will be made in accordance with the details and technical manuals issued for these purposes by the Superintendence. Art. 13.- With the objective of ensuring the correct use of the SPU, employers must ensure that the person in charge of social security and employer-employee payrolls makes adequate use of the operating manuals of said system, as well as the user and password that have been assigned, guaranteeing the privacy and integrity of the declared information.

Contact Link Art. 14.- Entities must designate a contact link and their substitute, who will be in charge of direct communication and coordination with the Superintendence, to resolve any inconvenience related to the process of preparation and payment of payrolls. Art. 15.- The Superintendence will ensure the security, confidentiality, and integrity of the information transmitted through the SPU; for this effect, it must have contingency mechanisms that guarantee the non-interruption of operations. Art. 16.- To guarantee that the activity of declaration, payment, collection, and its implications is carried out effectively, the Superintendence will update the SPU as many times as it considers necessary and according to the functionalities required so that Social Security Institutions and employers, administrators, and users of said system can validate, correct, substitute, and process the information, within the legal deadlines established, and at the same time will keep updated the corresponding manuals and forms, ensuring their timely communication to Social Security Institutions and employers.

CHAPTER IV OTHER PROVISIONS AND VALIDITY

Art. 17.- In the collection contracts that Social Security Institutions establish with financial entities authorized by the Superintendence for this purpose, the obligation of these entities to inform said Superintendence, the ISSS, ISP, UPISSS, and the AFPs of the payments of social security contributions and employer-employee contributions in real time or the following day of receipt, as required, must be stipulated, with the aim of updating the database regarding collected payments. Art. 18.- The presentation of the payroll through the SPU will be starting from the accrual month of June 2023, which will be declared and paid by employers in the first ten business days of July 2023. (1)

Sanctions Art. 19.- Non-compliance with the provisions contained in these Norms will be sanctioned in accordance with what is established in the Law on Supervision and Regulation of the Financial System.

Transitory Art. 20.- Employers must implement the provisions of these Norms gradually, taking into consideration the manuals and technical details provided for such purposes by the Superintendence. For employers who, due to force majeure or fortuitous event, need to declare and pay payrolls for the accrual month of May 2023 and periods prior to this, they may do so through the mechanisms established by the Superintendence for such purposes, having until September 30, 2023, for such adaptation. (1)

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 8 CNBCR-03/2023 NSP-84 TECHNICAL STANDARDS FOR THE IMPLEMENTATION OF THE SINGLE PAYROLL IN THE PENSION SYSTEM Approval: 03/05/2023 Validity: 19/05/2023

Unforeseen Aspects Art. 21.- Aspects not provided for in regulatory matters in these Norms will be resolved by the Central Bank through its Norms Committee.

Validity Art. 22.- These Norms will enter into force starting from the nineteenth of May of two thousand twenty-three.

MODIFICATIONS: (1) Modifications to articles 3, 18, and 20, approved by the Central Bank through its Norms Committee, in Session No. CN-06/2023 of July 31, two thousand twenty-three, with validity starting from July 31, two thousand twenty-three.

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 8 CNBCR-03/2023 NSP-84 TECHNICAL STANDARDS FOR THE IMPLEMENTATION OF THE SINGLE PAYROLL IN THE PENSION SYSTEM Approval: 03/05/2023 Validity: 19/05/2023

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 Page 6 of 8 CNBCR-03/2023 NSP-84 TECHNICAL STANDARDS FOR THE IMPLEMENTATION OF THE SINGLE PAYROLL IN THE PENSION SYSTEM Approval: 03/05/2023 Validity: 19/05/2023

DETAIL OF INFORMATION ON PAYMENT OF SOCIAL SECURITY AND EMPLOYER-EMPLOYEE PAYROLLS

Institution Code Code assigned by the Superintendence Payment Date and Time Date and time of payment execution Electronic Payment Number or ISSS Receipt Number Electronic Payment Number (NPE) to which the payment is associated, or for the ISSS, the payment receipt number Transaction Code Internal code assigned by the collecting institution to the payment transaction Amount Paid Amount being paid Branch Branch of the institution where the payment is made