Guidelines on the Application of Provisions Established in the Integral Pension System Law

Considering that from the entry into force of the Integral Pension System Law, the following provisions must be taken:

A. Regarding Old-Age Pension Payments

a) Adjustments to pensions in accordance with the provisions of the Integral Pension System Law will apply from January 1, 2023.

b) All pensions exceeding US$3,000.00 (United States Dollars) must be adjusted to this amount, effective January 1, 2023.

c) Pensions granted by Pension Fund Administrators (AFP), the Pension Unit of the Salvadoran Social Security Institute (UPISSS), and the National Institute of Pensions for Public Employees (INPEP), now the Salvadoran Institute of Pensions (ISP), must be increased by 30%. For cases where the resulting amount is greater than US$390.00 and less than US$400.00, the pension to be paid will be US$400.00; for cases where the resulting amount is greater than US$440.00 and less than US$450.00, the pension to be paid will be US$450.00; and for cases where the resulting amount is greater than US$490.00 and less than US$500.00, the pension to be paid will be US$500.00.

d) In the case of pensions currently being paid upon the entry into force of the Integral Pension System Law, the adjustment to their pensions as established in subsection b) of this section will apply.

e) From the accrual month of January 2023, and by virtue of the entry into force of the Integral Pension System Law, only pensioned affiliates by old age of the Pension System whose monthly pension amount exceeds six minimum pensions, as referenced in Article 114 of the aforementioned Law, will make a special contribution to the Solidarity Guarantee Account equivalent to 7% of their pension.

f) Affiliates pensioned in accordance with subsection a) of Article 104 of the repealed Pension Savings System Law will be entitled to the minimum pension guarantee referenced in Article 114 of the Integral Pension System Law and to the 30% increase on this, in accordance with Article 98 of the aforementioned Law.

g) For the group of pensioned affiliates referenced in the previous subsection, whose pension payment had been suspended upon the entry into force of the Integral Pension System Law due to the exhaustion of their Individual Pension Savings Account balance, will have the right to the minimum pension guarantee established in Article 114 and to the 30% increase on this; therefore, their pension payment will be resumed starting from the month of January 2023.

h) The Regulated Basic Salary to be used for the calculation of the old-age pension benefit for the opted group of affiliates will be that referenced by the repealed Pension Savings System Law.

i) From the entry into force of the Integral Pension System Law, affiliates of the Public Pension System who access the old-age benefit and wish to remain under labor subordination must continue contributing based on the percentages established in Article 16 of the aforementioned Law, for which they must affiliate with a Pension Fund Administrator.

j) Cases of old-age benefit pension requests that are in process upon the entry into force of the Integral Pension System Law may be concluded with the provisions contained in the aforementioned Law, this Resolution, and the Technical Standards approved by the Standards Committee of the Central Reserve Bank of El Salvador, without the need for the affiliate to submit a new request. Nevertheless, in cases where pension periods prior to the entry into force of the aforementioned Law must be paid, these must be calculated according to the provisions of the repealed Pension Savings System Law.

k) In the case of affiliates in the Public Pension System who possess an old-age pension reduced due to holding a survivorship pension in an amount higher than the first, identification of this group of affiliates must be performed, and the 30% increase applied to the original old-age pension. In cases where, with this increase, the old-age pension amount exceeds the survivorship pension amount, the latter must be reduced.

l) The compensation benefits referenced in Article 116-B of the repealed Pension Savings System Law, for both pensioners currently being paid and processes in progress upon the entry into force of the Integral Pension System Law, are null and void from the entry into force of the aforementioned Law.

m) The profitability differentials established in Article 116-B of the repealed Pension Savings System Law, for processes in progress where the benefit was a balance refund, are null and void from the entry into force of the Integral Pension System Law.

n) Minimum pension supplements, whose financing was borne by the State for accruals of old-age, disability, or survivorship benefits, from the entry into force of the Integral Pension System Law will be borne by the Individual Pension Savings Account or the Solidarity Guarantee Account, as applicable.

o) Pensioners by old age, disability, or survivorship who had not met the requirements to obtain the right to the minimum pension guarantee, established in the repealed Pension Savings System Law, will maintain this condition upon the entry into force of the Integral Pension System Law, and their pension will be suspended upon the exhaustion of the balance of their Individual Pension Savings Account.

B. Regarding the Declaration and Payment of Payroll

From the declaration and payment of the payroll corresponding to the accrual month of January 2023, the applicable contribution percentages will be in accordance with what is established in Article 16 of the Integral Pension System Law.

C. On Verification of Survival

All pensioners who verified their survival in 2022 in accordance with the repealed Pension Savings System Law will maintain their validity until the corresponding end month in 2023. Subsequently, the verification of survival will be semi-annual in accordance with what is established in Article 118 of the Integral Pension System Law.

D. On Early Access to the Individual Pension Savings Account

For those applications submitted completely; that is, where all necessary information had been sent and signed, in accordance with what is established in the "Technical Standards for the Operation of Early Access to the Individual Pension Savings Account" (NSP-03) and which were in process at the time of the entry into force of the Integral Pension System Law, will continue and be concluded in accordance with the aforementioned Technical Regulation.

E. On Disability and Survivorship Insurance

a) The Disability and Survivorship Insurance contracted prior to the entry into force of the Pension System will remain valid until the contracted date.

b) Actions derived from Disability and Survivorship Insurance Contracts contracted prior to the entry into force of the Integral Pension System Law will prescribe within a period of ten years, counted from the date of occurrence of the event, in accordance with the conditions agreed upon in them, in accordance with Article 158 of the Integral Pension System Law.

c) Pension Administrators must continue submitting the information referenced in the "Technical Standards for the Bidding, Awarding, and Contracting of Disability and Survivorship Insurance for Pension Fund Administrating Institutions" (NSP-04), repealed, regarding amounts paid to Insurance Companies, claims notices, first-determination pensions, requests without insurance coverage, and claim payments, according to the Annex attached to these Guidelines.

F. On Disability and Survivorship Pension

a) In cases where a beneficiary of a currently paid survivorship pension has met the requirements to generate a minimum survivorship pension, according to the repealed Pension Savings System Law, the provisions of Article 113 of the Integral Pension System Law will apply. Thus, the sum of the pensions of each beneficiary cannot be less than the amount of the full old-age minimum pension. The adjustment to the minimum survivorship pension will consist of redistributing, proportionally, the difference between the sum of the pensions and the minimum pension amount, assigned to each beneficiary, until reaching 100% of the aforementioned minimum pension.

b) Changes regarding the Regulated Basic Salary for the calculation of Disability and Survivorship pensions apply to events occurring from the entry into force of the Integral Pension System Law.

c) In the case of affiliates in the Public Pension System who are receiving a disability pension and possess an age equal to or greater than that established in the Integral Pension System Law to access an old-age pension, and for whom conversion to the latter has not been performed meeting the conditions for such conversion, the 30% increase must be applied to their pension, and they must be identified as old-age pensioners in the corresponding payroll.

d) Disability and Survivorship pensions exceeding US$3,000.00 (United States Dollars) must be adjusted to this amount, effective January 1, 2023.

e) Partial disability pensions currently being paid must be adjusted to US$212.92 from the accrual month corresponding to January 2023.

G. Relative to the Formation of the Pension Fund

a) Pension Fund Administrators will have a period of sixty (60) days counted from the entry into force of the Integral Pension System Law to transfer resources from the Special Retirement Fund to the Conservative Fund, with the effect that only the latter remains; therefore, Pension Administrators from March 1, 2023, must form a single Pension Fund in accordance with Articles 27 and 75 of the Integral Pension System Law, which may be preceded by the name of the corresponding administrator.

b) For the transfer of resources, each of the Pension Fund Administrators may transfer money and instruments between Funds under the free delivery payment modality without the need for the transaction to be carried out in a stock exchange, in both cases, it will be executed at the prevailing price of the same.

c) For the transfer of quotas from the Special Retirement Fund to the Conservative Fund, the quota value of the closing operations on February 28, 2023, must be considered, according to the following method:

Number of equivalent quotas = (VC_Special Retirement ÷ VC_Conservative) * N

Where:
Number of equivalent quotas: Number of quotas in the Conservative Fund.
VC_Special Retirement: Value of the quota of the Special Retirement Fund on the day of transfer.
VC_Conservative: Value of the quota of the Conservative Fund on the day of transfer.
N: Number of quotas of the Special Retirement Fund that the affiliate had at the time of transfer.

d) For the year 2023, Pension Fund Administrators will prepare the quarterly Financial Statements of their corresponding Fund, comparing them with the Conservative Fund of 2022.

H. Regarding Cancellation of Transfer Certificates

For cases of cancellation of Transfer Certificates that have been issued, the following procedure must be applied:

a) When an affiliate decides not to continue with the process to access a pension benefit in a Pension Fund Administrator, or for any other legal cause justifying it, to promote the legal nullification of the issuance of a Transfer Certificate that has been previously exchanged for an Investment Certificate and subsequently for a Transition Financing Certificate or a Pension Obligations Certificate, the Pension Fund Administrator must state in writing to the Superintendency of the Financial System the conditions justifying the request, detailing the characteristics of the referenced Transfer Certificate.

b) The Superintendency of the Financial System will evaluate the legal reasonableness of the request and issue a resolution on the pertinence of legally nullifying the issuance of the referenced Transfer Certificate. This will be communicated to the corresponding Pension Fund Administrator, the Salvadoran Institute of Pensions, and the Pension Institution that issued the Transfer Certificate.

c) In the resolution referenced in the previous paragraph, the minimum required information will be included, as listed below, which allows identifying the Transfer Certificate left without effect, so that the Salvadoran Institute of Pensions coordinates with the Pension Fund Administrator to ensure that the information related to the cancellation of the referenced obligation is correct, and proceeds to adjust the original value of the Transition Financing Certificate or Pension Obligations Certificate, as applicable:

Name of the Pension Institution that issued the Transfer Certificate.
Macrotítulo Number where the Transfer Certificate to be eliminated is located.
Affiliate's Transfer Certificate Number.
Affiliate's Identity Document.
Affiliate's Name.
Date of issuance of the Transfer Certificate.
Expiration date of the Transfer Certificate.
Face Value of the Transfer Certificate.
Updated value of the Transfer Certificate at the time of exchange.

d) Once the coincidence between the value of the Transfer Certificate declared without effect is verified and the referenced adjustment is agreed upon, Pension Fund Administrators as Holders of the Transition Financing Certificates, as applicable, will inform the Superintendency of the Financial System of this agreement, with the Pension Fund Administrator required to include the corresponding legend on the reverse of the Macrotítulo of the Transition Financing Certificate or, in its absence, via a paper attached to it; this legend must be jointly signed by an authorized representative of the Pension Fund Administrator and the Salvadoran Institute of Pensions, stating the adjustment in the value of the Transition Financing Certificate, equivalent to the amount valued at the time of exchange of the cancelled Transfer Certificate.

e) On the date that the Pension Fund Administrator annotates the legend on the Macrotítulo or attaches the corresponding document as proof of the agreement to decrease the Transition Financing Certificate, the Salvadoran Institute of Pensions will perform the accounting adjustments to the referenced Certificate.

f) On that same date, the Pension Fund Administrator will perform the necessary operational and accounting adjustments in the portfolio and accounting of the corresponding Pension Fund. For the adjustment to the issuance value of the Transition Financing Certificate corresponding to the investment portfolio of the Pension Funds, Pension Fund Administrators will report to the Superintendency of the Financial System, in Report IA5: Daily Movements of the Pension Fund Portfolio and Custodied Values, as movement type O: "Operation by Adjustment to investment amount in CFT due to cancellation of CT" and P: "Custody Operation by Adjustment to investment amount in CFT due to cancellation of CT", reporting the Transition Financing Certificate Code and the amount to adjust in the "Nominal Amount" column, completing the rest of the fields, as applicable.

g) The cancellations of Transfer Certificates will be applied against the amount of the Transition Financing Certificates (CFT) of Series "A", as they are the first to be issued and to maintain a logical order. When a cancellation is performed, Pension Fund Administrators will first reconcile with the Salvadoran Institute of Pensions (ISP) on the amount by which the decrease must be performed, and then they will appear before the Central Reserve Bank to perform the respective annotation, modifying the current nominal values and the respective payment plans of Series "A" CFTs.

The value of the decrease will be according to the following:

Exchange of the Transfer Certificate when no coupon payment has been registered for the CFT: The value of the Series "A" CFT will be adjusted by the valued amount of the Transfer Certificate in the investment portfolio at the time of exchange for the corresponding CFT.
Exchange of the Transfer Certificate, when a coupon payment has been registered for the CFT: The value of the Series "A" CFT will be adjusted by the valued amount of the Transfer Certificate in the investment portfolio at the time of exchange for the CFT, deducting the capital amortizations corresponding to that value with the conditions of the Series "A" CFT. For this case, the AFPs will proceed to return in cash to the ISP, the interest and capital amortization, calculated with the conditions of the Series "A" CFT, on the amount of the Transfer Certificate valued at the time of exchange.

In both cases, in the pension fund's equity, the value of the Transfer Certificate to be debited from the individual pension savings account will be determined by multiplying the quantity of quotas acquired by the corresponding title, by the quota value available on the date of cancellation; the differences that arise between the valued Transfer Certificate and the quota value, and what corresponds to the reduction in the investment portfolio plus the returns of capital and interest, when applicable, will be imputed to the profitability of the pension fund in the corresponding accounting account.

All of the above will be applicable to Transfer Certificates that were previously exchanged for Investment Certificates.

h) Despite the adjustment made to the original value of the issued Transition Financing Certificate, it will maintain one of its characteristics: the weighted average interest rate on the capital pending amortization, established at the time of its issuance.

i) The procedure described in this section would also apply if it were the cancellation of a Supplementary Transfer Certificate.