Regulation of the Actuarial Committee of the Pension Savings System

DE No. 7/2019
DECRETO No. 7/2019
REGULATION OF THE ACTUARIAL COMMITTEE OF THE PENSION SAVINGS SYSTEM Approval: 19/02/2019 Validity: 03/03/2019

DECRETO No. 7

THE PRESIDENT OF THE REPUBLIC OF EL SALVADOR,

CONSIDERING:

I. That by Legislative Decree No. 927, dated December 20, 1996, published in Official Diary No. 243, Volume No. 333, dated December 23 of the same year, the Law of the Pension Savings System was issued;

II. That by Legislative Decree No. 787, dated September 28, 2017, published in Official Diary No. 180, Volume No. 416, of that same date, reforms to the Law of the Pension Savings System were issued;

III. That article 110-C of the Law of the Pension Savings System creates the Actuarial Committee, as a technical body with the objective of periodically reviewing the parameters of the Pension Savings System for its sustainability, therefore it is necessary to approve the Regulation containing the provisions for the organization and functioning of said Committee.

THEREFORE,

in exercise of its constitutional powers,

DECREES the following:

REGULATION OF THE ACTUARIAL COMMITTEE OF THE PENSION SAVINGS SYSTEM

CHAPTER I
OBJECT AND DEFINITIONS

Object
Art. 1.- The purpose of this Regulation is to establish the guidelines for the functioning of the Actuarial Committee; as well as the selection of the workers' representatives and the designation of the employers' representatives, in order to comply with what is established in article 110-C of the Law of the Pension Savings System.

Definitions
Art. 2.- For the purposes of this Regulation, the following definitions will be used:
a) AFP: Pension Fund Administrators; b) Central Bank: Central Reserve Bank of El Salvador;

c) Committee: Actuarial Committee; d) Funds: Pension Funds; e) Law: Law of the Pension Savings System; f) President: President of the Actuarial Committee; g) Superintendent: Superintendent of the Financial System; and, h) Superintendence: Superintendence of the Financial System.

CHAPTER II
OF THE ACTUARIAL COMMITTEE

Objective and integration of the Actuarial Committee Art. 3.- The objective of the Committee is to periodically review the parameters of the Pension Savings System, for its sustainability, in accordance with what is established in article 110-C of the Law. The Committee will be integrated, in accordance with what is established in the fourth paragraph of article 110-C of the Law, so that its members assume the position from their appointment or designation.

Of the actuary
Art. 4.- At least one of the members of the Committee must be an actuary, demonstrating their qualification by meeting one of the following requirements:
a) Hold a university degree in actuarial science; or, b) Hold a university degree in the field of economics, finance, demography, or social security, with advanced studies in actuarial science; or, c) Hold a certification from an internationally recognized association or institute of actuaries.

Of the designated representative of the World Bank or the Inter-American Development Bank Art. 5.- The Presidency of the Republic, through the Secretariat responsible for development planning, will request from the office of the World Bank or the Inter-American Development Bank with representation in El Salvador, the designation of a representative of said entity in the Committee.

Conflicts of interest
Art. 6.- The members of the Committee, prior to assuming their position, must express, through a sworn statement, granted before a Salvadoran notary, the non-existence of conflicts of interest for the exercise of the position.

In the event that, subsequently, a member of the Committee has a conflict of interest in any matter submitted for approval or their spouse, cohabitant, relatives within the fourth degree of consanguinity or second degree of affinity, they must withdraw from the corresponding session, while the point of interest is discussed and any provision relative to it is agreed upon.

CHAPTER III
OF THE REPRESENTATIVES OF THE WORKERS AND EMPLOYERS

Of the representatives
Art. 7.- The two representatives of the workers in the Committee will be designated by the confederations and federations of workers that have legal personality, duly registered with the Ministry of Labor and Social Welfare and that have current representation. The business guild with the maximum representation of the private enterprise will designate the two members who represent the employers in the Committee. The representatives of the workers and of the employers will exercise their functions for a period of three years, counted from their designation and may be re-elected in their functions. The designation of the member representatives of the workers, as well as of the employers, must be made at least thirty days in advance of the end of the member's term. The business guild, the confederations and federations of workers that designate their representatives, must be contributors to the Pension Savings System and be up to date with the payment of pension contributions.

Continuity in office
Art. 8.- If for any cause the designation of the new representatives of the workers or of the employers is not made, those who are in office will continue to serve until the designation of the new members.

Requirements
Art. 9.- The members designated by the workers and employers to integrate the Committee must meet the following requirements:
a) Hold a university degree and experience in the field of economics, finance, demography, or social security; b) Not be in an employment relationship with the entities that propose them, nor provide them with regular advisory services; c) They cannot be leaders of political, union, or guild parties; and, d) Not be within the disqualifications indicated in article 55 of the Law.

CHAPTER IV
OF THE PROCESS OF CHOOSING THE WORKER REPRESENTATIVE MEMBERS

Of the publication of the call
Art. 10.- The designation of the workers' representatives will be carried out in a special session of confederations and federations of workers, specifically convened for this purpose by the Superintendence, and may attend the same, representing said workers' organizations, the legal representative, attorney, or special designee. The Superintendence will carry out a publication in two printed newspapers of greatest national circulation and other media that it disposes of, to communicate the start of the election process of the representatives in the Committee. In the call, the place, date, and time in which the special session will be held, the documents that participants must present to prove their representation, the requirements that the persons to be nominated as designees must meet, and the disqualifications established in the Law, as well as the quorum for installation in the first and second call and the agenda of the session will be established.

Submission of the list of confederations and federations of workers Art. 11.- The Superintendence will request from the Ministry of Labor and Social Welfare, with a minimum of fifteen business days prior to the holding of the session, the submission of the list of the confederations and federations of workers registered with the aforementioned Ministry. The list must be sent to the Superintendence, at the latest within five business days of receiving the request, in the terms that it requires.

Documentation to be presented by confederations and federations of workers Art. 12.- The confederations and federations of workers interested in attending the special session, within fifteen business days from the date of publication of the call, will present to the Superintendence the following documentation:
a) Notarially certified copy of the statutes or constitutive document of the confederation or federation, as well as the credential in which the current appointment of the legal representative is stated, all duly registered with the Ministry of Labor and Social Welfare; b) Notarially certified copy of the power of attorney granted to the person who will attend the special session, if applicable; c) Simple letter authenticated by a notary, in which the representation of the confederation or federation is authorized, through a special designee in the special session, if applicable; d) Notarially certified copy of the Unique Identity Document of the legal representative, attorney, or special designee who will attend the special session; and, e) Solvency issued by the AFPs in which they contribute, which must be valid on the date of its presentation, or a certificate issued by the AFP of not being registered as an employer, as applicable.

Only confederations and federations of workers that are included in the list provided by the Ministry of Labor and Social Welfare and present the aforementioned documentation in due form may participate in the special session.

Of the documents to be presented by candidate aspirants Art. 13.- The persons who aspire to be candidates for workers' representatives must present to the Superintendence, within the period established in the previous article, the following documentation:
a) Curriculum vitae; b) Notarially certified copy of the Unique Identity Document and Tax Identification Number; c) Notarially certified copy of the university degree; d) Sworn statement indicating compliance with the requirements that the law establishes to perform the position; that they are not within the disqualifications of article 55 of the law, of not being in the circumstances foreseen in letters b) and c) of the seventh paragraph of article 110-C of the law, as well as the obligation to exercise their functions with independence with respect to the entity that proposed them; and, e) Sworn statement of their spouse and relatives within the first degree of consanguinity that they are not within the disqualifications referred to in the last paragraph of article 55 of the Law.

The Superintendence may request from the Ministry of Finance, the Supreme Electoral Tribunal, the Ministry of Labor and Social Welfare, and the Ministry of Governance and Territorial Development, as applicable, the information regarding compliance with the requirements established in letters b) and c) of the seventh paragraph of article 110-C of the Law.

Verification of information
Art. 14.- To facilitate the holding of the special session, the Superintendence may verify the information referred to in articles 12 and 13 of this Regulation, with the purpose that what is established in article 110-C of the Law is complied with.

Correction of documentation
Art. 15.- The Superintendence may communicate to the interested parties the inconsistencies it detects in the required documents, in accordance with articles 12 and 13 of this Regulation, so that the corresponding documentation can be completed in due form, within the period it determines.

Of the special session
Art. 16.- The special session will be held with the number of accredited confederations and federations of workers, in accordance with what is provided in article 12 of this Regulation, and will be valid with the attendance of half plus one of the aforementioned entities.

If the quorum for the first call is not met, a second call will be carried out on the same day, with the number of confederations and federations present.

Both in the first call and in the second, the special session can only take place if at least ten representations of confederations and federations are present.

In the event that the special session cannot be held, the Superintendence must initiate a new election process.

Development of the special session
Art. 17.- The special session will be developed, according to the following rules:
a) It will be presided over by the Superintendent or, by delegation, by the Adjunct Superintendent of Pensions; b) It will be held with the corresponding quorum, in the first or second call, in which the legal representatives, attorneys, or special designees must record their attendance; c) Candidate proposals, to be accepted, must have the support of at least three confederations and/or federations of workers, which will be documented in writing or in the manner established by the Superintendence; d) Each confederation and/or federation of workers attending the special session will have one vote; e) Each attendee must express nominally and publicly the candidate to whom they grant their vote, which will also be documented through a voting form that will be delivered to the representative, attorney, or designee who signs the attendance; and, f) The person presiding over the special session will conduct the vote count, through the respective count, showing the final results to all attendees.

The holding of the session will be documented in minutes, recounting what was done or, equivalently, by reference to the audiovisual record of the special session.

Of the minutes of the session
Art. 18.- The procedure of the session will be documented in minutes, in accordance with what is established in article 110-C, of the eleventh paragraph, letter e) of the law, in which at least the following must be stated:
a) Establishment of the quorum; b) Nomination of candidate proposals, stating the delivery of the documentation established in article 13 of this Regulation; and, c) Result of the vote.

The minutes of the special session will be signed by the person presiding over the session and by at least ten of the representatives of confederations and/or federations who attend it.

Result of the process
Art. 19.- Once the election process is finished, the Superintendence will publish, within a maximum period of two business days, in two printed newspapers of greatest national circulation and in the digital media it disposes of, the result of the process, establishing, if applicable, the names of the workers' representatives who will form the Committee. The Superintendent of the Financial System will issue a certificate of designation to each of the workers' representatives.

CHAPTER V
OF THE PROCESS OF DESIGNATION OF THE EMPLOYER REPRESENTATIVE MEMBERS

Submission of the list of business associations Art. 20.- The Superintendence will request from the Registry of Associations and Non-Profit Foundations, of the Ministry of Governance and Territorial Development, the lists of registered members of the business associations. Such lists must be sent to the Superintendence, at the latest within a period of ten business days after the request has been received.

The Superintendence, based on the information referred to in the previous paragraph, will proceed to determine the guild with the maximum representation of the private enterprise, which will designate the two members who represent the employers in the Committee.

Request for designation and documentation to be presented Art. 21.- The Superintendence will request from the guild with the maximum representation of the private enterprise, to carry out the designation of the two representatives in the Committee, within a period of ten business days following the communication, for which it must present for each of them the following documentation:
a) Curriculum vitae; b) Notarially certified copy of the Unique Identity Document and Tax Identification Number; c) Notarially certified copy of the university degree; d) Sworn statement indicating compliance with the requirements that the law establishes to perform the position; that they are not within the disqualifications of article 55 of the law; of not being in the circumstances foreseen in letters b) and c) of the seventh paragraph of article 110-C of the law; as well as the obligation to exercise their functions with independence, with respect to the entity that proposed them; and, e) Sworn statement of their spouse and relatives within the first degree of consanguinity, that they are not within the disqualifications referred to in the last paragraph of article 55 of the law.

The Superintendence may request from the Ministry of Finance, the Supreme Electoral Tribunal, the Ministry of Labor and Social Welfare, and the Ministry of Governance and Territorial Development, as applicable, the information regarding compliance with the requirements established in letters b) and c) of the seventh paragraph of article 110-C of the law.

Likewise, within the period indicated in the first paragraph, the aforementioned guild must present solvency issued by the AFPs in which they contribute, which must be valid on the date of its presentation, or a certificate issued by the AFP of not being registered as an employer, as applicable.

Verification and correction of documentation
Art. 22.- The Superintendence will verify the information referred to in the previous article, with the purpose that what is established in article 110-C of the law is complied with.

In the event of detecting inconsistencies in the received documents, the Superintendence will require the correction of the same, in order to complete the corresponding documentation in due form within the period it determines.

If, from the verification of the documentation, the Superintendence concludes that any of the proposed designees do not meet a requirement, it will notify said situation to the guild, in order to proceed to make a new designation, which must satisfy the requirements established in article 110-C of the law.

Of the publication of the employers' representatives Art. 23.- The Superintendence, within a maximum period of three business days following the end of the designation process, will publish in two printed newspapers of greatest national circulation and in the digital media it disposes of; the names of the employers' representatives who will form the Committee.

CHAPTER VI
OF THE ORGANIZATION AND FUNCTIONING OF THE ACTUARIAL COMMITTEE

Responsibilities of the Committee
Art. 24.- The main responsibilities of the Committee are:
a) Determine and notify the Superintendence and the Central Bank, every three years from the validity of the law and at the latest in the first quarter of the corresponding year, the amount of minimum pensions, as defined in article 145 of the law; b) Collect information and evaluate the impact of changes in life expectancy expectations and labor market conditions on the results of the Pension System, including the cost of longevity benefits, through actuarial studies; c) Review every 5 years, the estimates of life expectancy of the population of El Salvador, published by the Latin American and Caribbean Demographic Centre (CELADE), to determine the variation of the retirement age, referred to in article 104 of the law, communicating it to the Superintendence and the Central Bank, for its application; d) Review and define the sufficiency and composition of the Solidarity Guarantee Account, at least every three years and propose modifications and mechanisms to guarantee its sustainability; and, e) Analyze and quantify all initiatives of reform proposals to the legal and regulatory framework of the Pension Savings System and the Public Pension System, in order to remit it to the Legislative Assembly, the Executive Branch, the Superintendence, and the Central Bank, so that they consider the implications of the initiatives and, if there is a need for additional resources, identify the sources of financing.

Actuarial study
Art. 25.- The Committee must carry out the actuarial study that supports the review of minimum pension amounts, recommendations, diagnoses, and other documents issued by the Committee, which must be published at the latest ten days after its issuance, in the electronic media of the Central Bank and the Superintendence and by any other means that guarantee its effective dissemination.

The Central Bank and the Superintendence must collaborate with the Committee, to comply with the period established in the previous paragraph.

Presidency of the Committee
Art. 26.- The Presidency of the Committee will be exercised by the Superintendent.

It corresponds to the President of the Committee:
a) Preside and direct the sessions; b) Make the calls to the sessions; c) Ensure the due compliance of the agreements adopted by the Committee; d) Request the support that may be necessary from the entities referred to in the penultimate paragraph of article 110-C of the law, when so agreed by the Committee; e) Entrust the realization of specialized technical studies that the Committee agrees on; and, f) Perform the functions that are necessary for the correct management of the Committee.

Secretariat of the Committee
Art. 27.- The Secretariat of the Committee will be exercised by a member of it, to whom the following will correspond:
a) Verify the quorum and read the minutes of the previous session; b) Take note of the agreements adopted in each session and verify the entry of these in the Minutes Book that the Secretariat keeps for this purpose; c) Carry out the notification of the agreements, as applicable; d) Keep control of the sessions and of the agreements; and, e) Ensure that the Minutes Book and the files are up to date.

DE No. 7/2019
DECRETO No. 7/2019
REGULATION OF THE ACTUARIAL COMMITTEE OF THE PENSION SAVINGS SYSTEM Approval: 19/02/2019 Validity: 03/03/2019

Quorum
Art. 28.- The Committee shall hold sessions with the attendance of at least half plus one of its members and in any case, to consider a session valid and its agreements enforceable, it must have the attendance of the President of the Committee and at least one of the delegates of the employers and one of the delegates of the workers.

Frequency of meetings
Art. 29.- The Committee's sessions may be ordinary and extraordinary, for which the place, date, and time of their holding shall be established.
Ordinary sessions shall be held at least once a year and extraordinary sessions, as many times as necessary, to address matters that must be attended to urgently.
Regarding ordinary sessions, the summons shall be sent at least three days in advance of the session date and, in the case of extraordinary sessions, two days in advance or immediately, when the situation so warrants; in any case, it shall be accompanied by the draft agenda with the respective supporting documentation. Summons shall be issued by any means, leaving a record of their delivery and receipt.

Allowances
Art. 30.- The representatives of the employers and workers on the Committee shall receive payment of allowances from the Superintendence for each session they attend. The amount of the allowances may not exceed two minimum monthly salaries of the commerce sector and shall be approved by the Board of Directors of the Superintendence.

Adoption of agreements
Art. 31.- The Committee's agreements shall be taken by majority vote and in case of a tie, the President of the Committee shall have a casting vote.
The agreements shall be duly justified, which must be recorded in the minutes of the respective session.

Obligation of confidentiality
Art. 32.- The members of the Committee must maintain strict confidentiality regarding the background of the actuarial study and other documents to which they have access, until such information is published, in accordance with Article 25 of this Regulation. The obligation of confidentiality regarding the deliberations and agreements adopted by the Committee shall apply to all members and persons who have participated and become aware of the adoption thereof. Furthermore, they are prohibited from using or taking advantage of the information for personal purposes or in favor of third parties.

Minute book
Art. 33.- The deliberations and agreements adopted in the Committee's sessions must be recorded in a Minute Book. This book may be kept by any means, provided that it is guaranteed that there can be no intercalations, interpolations, omissions, or any other adulteration that could affect the integrity of the text of the minutes.

Content of the minutes
Art. 34.- The minutes of each session must record the place, date, and time of the holding; the names of the persons acting as President and Secretary, the list of attendees, a summary version of the matters discussed, the form and result of the votes, and the agreements adopted. If for any circumstance the minutes of a session cannot be recorded in the respective Book, they shall be recorded in a public deed. The minutes must be signed by the President, the Secretary, and other members present. Members present who vote against the agreement and wish to record their opposition may request that their position be recorded in the minutes, or the sense of the opinions and votes they have cast. Likewise, they have the right to record in the minutes the corresponding reservations, if they consider that such agreement suffers from inaccuracies or omissions.

CHAPTER VII
FINAL PROVISIONS AND VALIDITY

Request for institutional support
Art. 35.- The Committee may request support from various entities, such as universities, think tanks, as well as entrust the realization of specialized technical studies, in order to strengthen the analysis and recommendations within the scope of its competence.

Support of the Superintendence
Art. 36.- The Superintendence shall cover the expenses associated with the functioning of the Committee; as well as those of the specialized studies required and authorized by law, for which the Board of Directors of the Superintendence shall designate the budget it deems necessary.

Validity
Art. 37.- This decree shall enter into force eight days after its publication in the Official Journal.

GIVEN IN THE PRESIDENTIAL HOUSE: San Salvador, on the nineteenth day of the month of February of two thousand nineteen.

SALVADOR SÁNCHEZ CERÉN,
President of the Republic.

NELSON EDUARDO FUENTES MENJÍVAR,
Minister of Finance.
Published in Official Journal No. 37
Volume 422, of February 22, 2019.