Regulation on the Transfer of Economic Resources from the ISSS and INPEP to the AFPs for the Payment of Pensions to Affiliates Who Chose the SAP and Retire Due to Old Age

DE No. 94/2007 DECREE No. 94/2007
REGULATION ON THE TRANSFER OF ECONOMIC RESOURCES, FROM THE ISSS AND INPEP TO THE AFPs, FOR THE PAYMENT OF PENSIONS TO AFFILIATES WHO CHOSE THE SAP AND RETIRE DUE TO OLD AGE Approval: 10/18/2007 Validity: 12/11/2007

DECREE No. 94.

THE PRESIDENT OF THE REPUBLIC OF EL SALVADOR,

CONSIDERING:

I. That by Legislative Decree No. 927, dated December 20, 1996, published in the Official Diary No. 243, Volume No. 333, of the 23rd of that same month and year, the Law of the Savings Pension System was issued, through which the Savings Pension System was created for workers in the private, public, and municipal sectors; in it, the requirements to access the benefits of the system are established;

II. That by Legislative Decree No. 98, dated September 7, 2006, published in the Official Diary No. 171, Volume No. 372, of the 14th of that same month and year, the Law of the Fiduciary Trust for Pension Obligations was issued, through which the provisions for the constitution of a Fiduciary Trust for Pension Obligations are established, to exclusively attend to the obligations generated by the pension system; and,

III. That in accordance with Art. 23 of the Law of the Fiduciary Trust for Pension Obligations, a regulation will be drafted containing the provisions to operationalize the transfer of resources, from the ISSS and INPEP to the AFPs, for the payment of pensions to affiliates who opted for the Savings Pension System and retire due to old age.

THEREFORE,

in exercise of its constitutional powers,

DECREES the following:

REGULATION ON THE TRANSFER OF ECONOMIC RESOURCES, FROM THE ISSS AND INPEP TO THE AFPs, FOR THE PAYMENT OF PENSIONS TO AFFILIATES WHO CHOSE THE SAP AND RETIRE DUE TO OLD AGE

TITLE I
GENERAL PROVISIONS

SINGLE CHAPTER
OBJECT AND DESIGNATIONS

Art. 1.- The purpose of this Regulation is to establish the mechanisms that the Institutions of the Savings Pension System and the Public Pension System must follow for the transfer of economic resources from the Pension Institutes to the AFPs, for the payment of pensions to affiliates who opted for the Savings Pension System, according to the provisions contained in the Law of the Savings Pension System.

Art. 2.- In this Regulation, the following abbreviations and designations will be used:
a) AFP, by Pension Fund Administrator Institution. b) CIAP, by Individual Savings Account for Pensions. c) NUP, by Unique Pension Number. d) ISSS, by Salvadoran Social Security Institute. e) INPEP, by National Institute of Pensions for Public Employees. f) SAP Law, by Law of the Savings Pension System. g) FOP Law, by Law of the Fiduciary Trust for Pension Obligations. h) SAP, by Savings Pension System. i) Superintendence, by Financial System Superintendence. (1) j) Supervision Law, by Law of Supervision and Regulation of the Financial System. (1) k) Pension Institutes, by ISSS and INPEP. l) BANDESAL, by Development Bank of El Salvador. (1) m) Annual Plans, by Annual Plans for Compliance with Pension Obligations.

TITLE II
ON THE ECONOMIC RESOURCES TO BE TRANSFERRED BY THE PENSION INSTITUTES TO THE AFPs, FOR THE PAYMENT OF PENSIONS IN THE SAP.

CHAPTER I
ON THE SUBJECTS ENTITLED TO PENSION PAYMENT WITH RESOURCES FROM THE PENSION INSTITUTES

Art. 3.- When the balance of the CIAP of a pensioned affiliate due to old age, who opted to affiliate to the SAP, is insufficient to pay the respective pension, the Pension Institute where the last contribution was made before their affiliation to the SAP will transfer the economic resources to the AFP in which the worker is affiliated.

Art. 4.- The payment of the corresponding pension will operate when the requirements established in letter c) of Art. 104 of the SAP Law are met, according to the stages referred to in Art. 184-A of the same.

Art. 5.- The provisions contained in this Regulation will also be applicable to SAP affiliates who have adhered to Legislative Decrees numbers 249, dated January 11, 2001, published in the Official Diary No. 23, Volume No. 350, of the 31st of that same month and year, and number 369, dated March 29, 2001, published in the Official Diary No. 65, Volume No. 350, of the 30th of that same month and year.

CHAPTER II
ON THE BENEFIT PROJECTIONS THAT THE AFPs WILL CARRY OUT

Art. 6.- The AFPs will manage with the Pension Institutes the availability of the necessary work histories for the estimation of the economic resource needs that will be used for the payment of the benefits subject to this Regulation, as input for the preparation of the Annual Plans referred to in Art. 13 of the FOP Law, which must collaborate with them in a timely manner.

Art. 7.- The AFPs will design and implement the appropriate procedures and methodologies for carrying out the projections, which they will make known to the Superintendence, in order to technically support such estimates and which will serve as inputs for it to evaluate their reasonableness.

Art. 8.- The Annual Plans must contemplate the payment needs of the benefits indicated in Art. 16 of the FOP Law, related to those affiliates who retire due to old age and opted for the SAP.

Art. 9.- Once the Annual Plans are approved by the Board of Directors of the AFPs, they will be presented to the Superintendence, no later than the fifteenth day of the month of June of each year, for it to consolidate them and express itself on the reasonableness of the figures presented and deliver them to each of the direction bodies of the Pension Institutes.

Art. 10.- In accordance with what is established in Art. 13 of the FOP Law, the Annual Plans may be modified, prior to review by the Superintendence.

CHAPTER III
ON THE REQUEST FOR RESOURCES

Art. 11.- Based on the Annual Plans indicated in the previous Chapter, the AFPs must send the requests for economic resources to the Pension Institutes, as appropriate, no later than the tenth day of each month or the immediate preceding business day, if that day is not a business day, for the payment of pensions for the current month. The minimum content of the aforementioned resource request will be stipulated in the corresponding Instruction. [1]

Art. 12.- The AFPs must send along with the requests, the physical or electronic list of the NUPs entitled to old-age pension, as well as that of the NUPs of deceased pensioners, for whom the AFPs determine a survivor pension in favor of their beneficiaries. The lists must include the gross amounts for each rights holder.

Art. 13.- Upon receipt of the documentation indicated in the previous article, the Pension Institutes must transfer the economic resources requested by the AFPs, no later than the twentieth day of each month or the immediate preceding business day, if that day is not a business day, through the current account of the Pension Fund that administers and that has also been designated by the AFPs for such purpose. [1]

Art. 14.- The AFPs must send to the Pension Institutes an acknowledgment of receipt, no later than two business days after receiving the credit note sent by them.

Art. 15.- The AFPs will manage the resources coming from the Pension Institutes independently of those corresponding to the Pension Fund, both in the management of availabilities and in the payment of benefits. The benefits financed with these resources will be paid in payrolls different from those financed with resources coming from the CIAPs of affiliates.

Art. 15-A.- For the purpose of controlling the payment of benefits to pensioned affiliates or their beneficiaries, whose pension is financed with resources coming from the Pension Institutes, the AFPs must issue a report that reflects the income and expense movements related to the payment of pension obligations. The AFPs, at least every six months, must communicate in writing to each of the pensioners this report, or upon demand when they or their beneficiaries request it. [1]

CHAPTER IV
ON THE SETTLEMENT OF RESOURCES

Art. 16.- The remaining balances of the transfers of economic resources received, for pensions not made effective for legally established causes, such as deceased principals or beneficiaries during the respective month, must be settled in the next request for economic resources, requiring only the complement of the economic resources necessary for the payment of the pensions of the following month. For this, the AFPs must present a consolidated total amount required, which must reflect the changes generated by the granting of new pensions, expiration, and redistribution. In addition, they must send monthly to the Pension Institutes, a copy of the pension payment payrolls that they have carried out with economic resources coming from them.

Art. 17.- The settlements referred to in the previous article must serve as inputs for the Pension Institutes, for the settlement that they must carry out with BANDESAL, regarding the Annual Plans for Compliance with Pension Obligations referred to in Art. 18 of the FOP Law. [1]

Art. 18.- When the AFPs determine that funds were requested or transferred in excess, they must reimburse them immediately to the Current Account that the Pension Institutes designate for such purpose. In case that fewer resources were requested, the AFPs will incorporate the unrequired amount in the next resource request, which will be added to the payment of the next pension of the affiliate who is temporarily affected, which they must make known to the pensioner through written notification; notwithstanding the foregoing, the AFPs may advance them with their own resources, to recover them when they make the next fund request.

Art. 19.- The AFPs must require their External Auditors to, as part of the annual review of the Pension Fund's financial statements, include the execution of procedures aimed at verifying the adequate management and settlement of the transfers referred to in this Regulation.

TITLE III

SINGLE CHAPTER
VERIFICATION OF SURVIVAL

Art. 20.- The AFPs must verify the survival status of the pensioner, through the mechanisms defined by the Superintendence for such purposes; said verification must be carried out at least twice a year.

TITLE IV

SINGLE CHAPTER
FINAL PROVISIONS, REPEAL AND VALIDITY

Art. 21.- The AFPs must establish the necessary controls to guarantee the non-interruption of pension payments, when pensioners enter stage two referred to in Art. 184-A of the SAP Law.

Art. 22.- The Superintendence, based on what is established by letters h) and j) of Art. 6 of the Supervision Law, will audit and supervise the assigned pensions and the management processes of the economic resources transferred by the Pension Institutes to the AFPs, for the fulfillment of the payment of the corresponding pension benefits. [1]

Art. 23.- The Superintendence, based on the powers established in letter i) of Art. 4 of the Supervision Law, will impose the corresponding sanctions, in accordance with the procedures established in the aforementioned Law and in the SAP Law, when it detects from any of the pensional institutions, contraventions to the regulations related to the payment of pensions of affiliates who opted for the SAP and retire due to old age. [1]

Art. 24.- In case that the pensioner dies and there are survivors entitled to pension, the AFPs must make pension adjustments in accordance with the reference percentages established in Art. 121 of the SAP Law, following the procedure indicated in the second paragraph of Art. 184-A of the same.

Art. 25.- The aforementioned pensions will be suspended when it is proven that the pensioner has died or when their beneficiaries lose the right to the pension. [1]

Art. 26.- The AFPs must issue a resolution when a suspension of the pensions paid with economic resources transferred from the Pension Institutes is carried out, to support the termination of the relationship with the corresponding principals, which must be archived in the affiliate's file.

Art. 27.- Executive Decree No. 14, dated February 12, 2007, published in the Official Diary No. 62, Volume No. 374, of March 30 of that same year, is repealed.

Art. 28.- This Decree will enter into force eight days after its publication in the Official Diary.

GIVEN IN THE PRESIDENTIAL HOUSE: San Salvador, on the eighteenth day of the month of October of two thousand seven.

ELÍAS ANTONIO SACA GONZÁLEZ,
President of the Republic.

WILLIAM JACOBO HÁNDAL HÁNDAL,
Minister of Finance.

JOSÉ ROBERTO ESPINAL ESCOBAR,
Minister of Labor and Social Security.

MODIFICATIONS:
1) Modified by Decree No. 52, published in Official Diary No. 74, Volume No. 399 of April 24, 2013 and effective from May 3, 2013.

Executive Decree No. 94 of October 18, 2007
Published in Official Diary No. 225, Volume No. 377, of December 3, 2007 This compilation is an exact copy of what is established in the Official Diary.