Regulation for the Amortization Fund

DE No. 99/1998
DECRETO No. 99/1998
REGULATION FOR THE AMORTIZATION FUND Approval: 17/08/1998 Validity: 06/10/1998 DECRETE No. 99 THE PRESIDENT OF THE REPUBLIC OF EL SALVADOR, CONSIDERING:
I. That Article 224 of the Law on the Pension Savings System regulates that the Ministry of Finance, starting in the year one thousand nine hundred ninety-eight, must constitute an Amortization Fund for the financing of pensions and administrative expenses of the Public Pension System, when its technical reserves are exhausted, as well as for the payment of the redemption of transfer certificates.
II. That in the fifth paragraph of the aforementioned article, it is stated that a regulation will govern the procedure for the transfer of funds.
III. That it is necessary to issue the aforementioned regulation, which will facilitate the fulfillment of the State's legal obligation to annually transfer these resources to the Pension Fund Administrators.
THEREFORE, in the exercise of its constitutional powers, DECREES the following:
REGULATION FOR THE AMORTIZATION FUND
SINGLE TITLE
ON THE AMORTIZATION FUND
CHAPTER I
GENERALITIES
Object
Art. 1. This Regulation aims to facilitate the fulfillment of the State's legal obligation to constitute the Amortization Fund and transfer resources to the AFPs, as well as to regulate the procedures for the transfer of funds from the AFPs to the Ministry of Finance for the payment of minimum pensions and disbursements to the ISSS and INPEP. Designations Art. 2. In the text of this Regulation, the following designations will be used:

DE No. 99/1998
DECRETO No. 99/1998
REGULATION FOR THE AMORTIZATION FUND Approval: 17/08/1998 Validity: 06/10/1998 a) Law, for Law on the Pension Savings System. b) SAP, for Pension Savings System. c) SPP, for Public Pension System. d) INPEP, for National Institute of Pensions of Public Employees. e) ISSS, for Salvadoran Social Security Institute. f) AFP, for Pension Fund Administrators. g) AFI Law, for Organic Law of Financial Administration of the State.

h) Fund, for Amortization Fund. i) Superintendence, for Superintendence of Pensions. j) IVM, for Disability, Old Age and Death Regime.
CHAPTER II
CONSTITUTION AND OBJECTIVE OF THE AMORTIZATION FUND Constitution of the Fund Art. 3. The Amortization Fund will be constituted by the State through the Ministry of Finance, for which the State, starting from the year one thousand nine hundred ninety-eight, must allocate an annual percentage of the General State Budget, subject to approval by the Legislative Assembly in the respective Law; the annual percentages will be those established in the following table:

YEAR ANNUAL PERCENTAGE OF THE
GENERAL STATE BUDGET
1998 0.5%
1999 0.5%
2000 0.5%
2001 1.0%
2002 1.0%
2003 1.0%
2004 1.0%
2005 1.0%
2006 1.0%
2007 1.0%

DE No. 99/1998
DECRETO No. 99/1998
REGULATION FOR THE AMORTIZATION FUND Approval: 17/08/1998 Validity: 06/10/1998 The State's contributions to the Amortization Fund must be incorporated into the General State Budget Law Project of each fiscal year, for approval.
Objective of the Amortization Fund
Art. 4. The Amortization Fund aims to pay common disability, old age and death pensions of the SPP, administrative expenses of the IVM regime of the INPEP and the ISSS; redemption of Transfer Certificates and payment of minimum pensions of the SAP. The Amortization Fund will be administered by the AFPs and will be used by the Ministry of Finance until the Technical Reserves of the ISSS and INPEP are insufficient to cover the expenditures indicated in the previous paragraph, with the exception of the minimum pensions of the SAP, which will be paid from the date their payment is due, in accordance with the Law and the respective Regulation. Art. 5. The Superintendence will issue the Instruction to establish the administration procedures of the Amortization Fund by the Ministry of Finance, the AFPs, the ISSS and the INPEP. Deposit of the Fund Art. 6. Once the Budget is approved by the Legislative Assembly, the Ministry of Finance, according to cash flow behavior, will deposit resources monthly into the External Funds in Custody Account, Amortization Fund sub-account, opened at the Central Reserve Bank of El Salvador, in the name of the General Treasury Directorate, from which monthly transfers to the AFPs will be made. Likewise, resources obtained from the AFPs will be deposited in this account to pay minimum pensions of the SAP and make transfers to the ISSS and INPEP, as appropriate.
CHAPTER III
TRANSFER OF RESOURCES FROM THE MINISTRY OF FINANCE TO THE AFPs Requirements for the administration of the Fund.
Art. 7. The Ministry of Finance, in coordination with the Superintendence of Pensions, will transfer resources monthly to the AFPs, under the following criteria:

DE No. 99/1998
DECRETO No. 99/1998
REGULATION FOR THE AMORTIZATION FUND Approval: 17/08/1998 Validity: 06/10/1998 2008 1.0% 2009 1.0% 2010 1.0% 2011 onwards 1.5%

DE No. 99/1998
DECRETO No. 99/1998
REGULATION FOR THE AMORTIZATION FUND Approval: 17/08/1998 Validity: 06/10/1998 a) That the AFP to which the funds are intended to be transferred is operating and that the Pension Fund it administers is obtaining, at least, the average annual market profitability of the Pension Fund it administers, calculated in accordance with Art. 80 of the Law. b) The Superintendence of Pensions will make evaluations of the profitability of the pension funds administered by the AFPs, in accordance with the Investment Regulation of the SAP; due to the fact that in the year 1997, no evaluations will be made, the distribution of the Amortization Fund for the year 1998 will be carried out taking into account the AFPs that are operating at the date of the distribution of the Fund. c) The funds will be transferred to the AFPs that comply with what is established in letter a) of this article, in proportion to their market participation. For the purposes of this Regulation, market participation is understood as the amount of the Asset of the Pension Fund that they are administering at the date of the transfers, excluding the Amortization Fund. d) The AFP that does not obtain at least the average market profitability in the last twelve months will not be taken into account for the distribution of the Amortization Fund for the next quarter. If in the evaluation of the next quarter, the AFP manages to obtain at least the average market profitability, the Ministry of Finance will continue to disburse Resources from the Amortization Fund. e) If the AFP does not manage to obtain at least the average profitability during two consecutive years and is administering resources from the Amortization Fund, the Ministry of Finance will withdraw the resources and redistribute them in equal proportion among the AFPs that are complying with the requirements described in letter a) of this article. f) The profitability obtained from the investments of the Amortization Fund will form part of the same Amortization Fund. g) The Superintendence of Pensions, in coordination with the Ministry of Finance, may withdraw resources from the Amortization Fund, when it considers that the AFPs are not administering them efficiently. h) The detailed procedures for the administration of the Amortization Fund will be included in the aforementioned Instruction. When one of these fund transfers results in an important monetary impact, their programming must also be coordinated with the Central Reserve Bank of El Salvador, in accordance with Art. 64 of the AFI Law. Redistribution of the Fund by dissolution and liquidation of the AFPs. Art. 8. When an AFP is in the process of Dissolution and Liquidation, voluntarily or forcibly, in accordance with what is expressed in the Law, the resources of the Amortization Fund that it administers will be distributed in equal form among the AFPs that comply with the requirements mentioned in Art. 7, letter a), of this Regulation.

DE No. 99/1998
DECRETO No. 99/1998
REGULATION FOR THE AMORTIZATION FUND Approval: 17/08/1998 Validity: 06/10/1998
CHAPTER IV
INVESTMENTS OF THE AMORTIZATION FUND
Investment of the Fund
Art. 9. The AFPs will invest the resources of the Amortization Fund in accordance with the provisions contained in the Investment Regulation of the SAP; nevertheless, with the aim that there is availability of funds to cover the obligations described in Art. 4 of this Regulation, short-term investments must be carried out in accordance with the terms and amounts established in the Instruction that the Superintendence of Pensions will issue for such effect.
CHAPTER V
PAYMENT OF MINIMUM PENSIONS
Report on minimum pensions of the AFPs
Art. 10. The AFPs will send a list of the Minimum Pensions to be paid with the Amortization Fund to the Ministry of Finance and to the Superintendence of Pensions, at least three months in advance of the month corresponding to the payment of the minimum pension. Authorization for the payment of minimum pensions of the SAP Art. 11. The Ministry of Finance, based on the information received from the AFPs, will authorize the payment of minimum pensions at least 5 days before the date on which the Minimum Pensions are due to be paid, all in accordance with the Instruction that the Superintendence will issue for such effect. Payment of Minimum Pensions of the SAP Art. 12. The minimum pensions of the SAP charged to the State will be paid in accordance with the regulations that the Superintendence will issue for such effect, in accordance with art. 144 of the Law.
CHAPTER VI
REDEMPTION OF TRANSFER CERTIFICATES, PAYMENT OF PENSIONS AND ADMINISTRATIVE EXPENSES OF THE ISSS AND INPEP Request for resources for ISSS and INPEP Art. 13. When the Technical Reserves of the ISSS and the INPEP are exhausted, the redemption of Transfer Certificates, the payment of common disability, old age and death pensions and the administrative expenses of these Institutions, will be made with resources from the Amortization Fund. For this effect, these Institutions will request resources to the Ministry of Finance, within their annual budget. Financial reports of the Superintendence of Pensions Art. 14. For the purposes of authorization of resources, the Superintendence of Pensions, from the date when the Technical Reserves of the ISSS and INPEP are exhausted, will inform the Ministry of Finance quarterly, on the financial situation of these Institutes.

DE No. 99/1998
DECRETO No. 99/1998
REGULATION FOR THE AMORTIZATION FUND Approval: 17/08/1998 Validity: 06/10/1998 Elaboration and approval of the budget of the ISSS and INPEP Art. 15. For the elaboration and approval of the budget of the ISSS and INPEP, as well as the transfer of resources for payment of pensions for common disability, old age and death, redemption of Transfer Certificates and administrative expenses, charged to the Amortization Fund, the procedure will be carried out, where applicable, in accordance with what is established in the AFI Law. Transfer of funds from the AFPs to the Ministry of Finance Art. 16. The Ministry of Finance, in coordination with the Superintendence of Pensions, on the first five business days of each quarter, will take proportionally the resources of the Amortization Fund administered by the AFPs, and deposit them in the External Funds in Custody Account, Amortization Fund sub-account, opened at the Central Reserve Bank of El Salvador, to be transferred to the ISSS and INPEP. Monthly disbursements to the ISSS and INPEP Art. 17. The Ministry of Finance will make disbursements to the ISSS and to the INPEP, charged to the External Funds in Custody Account, Amortization Fund sub-account, monthly, using the mechanisms and procedures established in the AFI Law. Control of the Amortization Fund Art. 18. The Superintendence of Pensions will audit and supervise all procedures and activities related to the use and administration of the resources of the Amortization Fund, carried out by the AFPs, ISSS and INPEP; likewise, it will inform the Ministry of Finance periodically on the administration of this Fund. For its part, the General Budget Directorate of the Ministry of Finance will follow up on the budget execution of said resources, in accordance with what is established in the AFI Law.
CHAPTER VII
FINAL PROVISIONS
Art. 19. Any aspect not contemplated in this Regulation will be resolved by the Superintendence of Pensions, in accordance with the applicable legislation.
Art. 20. This Decree will enter into force eight days after its publication in the Official Diary.
GIVEN IN THE PRESIDENTIAL HOUSE: San Salvador, on the seventeenth day of the month of August of one thousand nine hundred ninety-eight.

DE No. 99/1998
DECRETO No. 99/1998
REGULATION FOR THE AMORTIZATION FUND Approval: 17/08/1998 Validity: 06/10/1998 ARMANDO CALDERON SOL, President of the Republic.
MANUEL ENRIQUE HINDS,
Minister of Finance.
EDUARDO TOMASINO HURTADO,
Minister of Labor and Social Welfare.
Published in Official Diary No.179
Volume No. 340, of September 28, 1998.
This compilation is an exact copy of what is established in the Official Diary.