Technical Standards for Investments of Voluntary Previsional Savings Funds

NSP-60
TECHNICAL STANDARDS FOR INVESTMENTS OF VOLUNTARY PREVISIONAL SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022

THE COMMITTEE OF STANDARDS OF THE CENTRAL BANK OF RESERVE OF EL SALVADOR, CONSIDERING:

I. That by Legislative Decree No. 614, dated December 20, 2022, published in Official Gazette No. 241 Volume No. 437, of the 21st of the same month and year, the Comprehensive Pension System Law was issued.

II. That Article 133 of the Comprehensive Pension System Law establishes that Voluntary Previsional Savings Funds shall be governed by the provisions of Chapter I of Title II of said Law, and, where applicable, by the Investment Funds Law.

III. That Article 137 of the Comprehensive Pension System Law establishes that investments of Voluntary Previsional Savings Funds may be made in a stock exchange or organized markets in El Salvador or abroad, or over-the-counter. In the case of open investment funds, participation shares may be acquired directly from their managers or administrators.

IV. That Article 141 of the Comprehensive Pension System Law establishes that the Central Bank of Reserve of El Salvador will issue the necessary technical standards that allow the development of Chapter I of Title II of said Law.

V. That Article 159 of the Comprehensive Pension System Law establishes that the Central Bank of Reserve of El Salvador must issue the relevant Technical Standards for the application of the legal provisions of said Law.

VI. That Article 35 of the Law on Supervision and Regulation of the Financial System establishes that directors, managers, and other officials holding positions of direction or administration in the members of the financial system must conduct their business, acts, and operations complying with the highest ethical standards of conduct and acting with the due diligence of a good merchant in their own business.

VII. That the figure of Voluntary Previsional Savings Funds is a savings mechanism that allows increasing the mass of savings of individuals, which will complement the resources of affiliates made through mandatory previsional savings.

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:

NSP-60
TECHNICAL STANDARDS FOR INVESTMENTS OF VOLUNTARY PREVISIONAL SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022

TECHNICAL STANDARDS FOR INVESTMENTS OF VOLUNTARY PREVISIONAL SAVINGS FUNDS

CHAPTER I
OBJECT, SUBJECTS AND TERMS

Object
Art. 1.- These Standards aim to establish guidelines and minimum provisions to consider regarding investments made with resources from Voluntary Previsional Savings Funds, with the objective of obtaining profitability, based on the risk level of the Fund, liquidity requirements, diversification, and limits defined in the Fund's investment policy.

Subjects
Art. 2.- The subjects obligated to comply with the provisions established in these Standards are the following:
a) Banks regulated by the Bank Law; b) Cooperative Banks regulated by the Law on Cooperative Banks and Savings and Credit Societies; c) Investment Fund Managers regulated by the Investment Funds Law; d) Pension Fund Administrators, regulated by the Comprehensive Pension System Law; e) Savings and Credit Societies regulated by the Law on Cooperative Banks and Savings and Credit Societies; f) Investment Managers of Voluntary Previsional Savings Funds authorized by the Superintendence of the Financial System, who work for an Institution Administrator of Voluntary Previsional Savings Funds; and g) Members of the Investment Committee, in case the Institution Administrator of Voluntary Previsional Savings Funds has constituted it.

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) Investment Manager: Natural person who is an employee of an Institution Administrator of Voluntary Previsional Savings Funds, for the purpose of managing the decision-making and execution of investments made with resources from Voluntary Previsional Savings Funds, in accordance with the Prospectus and the investment policy defined for said Fund. This category includes the Investment Manager or their substitute, according to the institution's organizational structure; b) Contributions: Resources or sum of money delivered to an Institution Administrator of Voluntary Previsional Savings Funds by a natural person or by the employer to the individual voluntary savings account of the participant; c) Central Bank: Central Bank of Reserve of El Salvador; d) Financial Conglomerate: In accordance with Article 113 of the Bank Law, it is a set of companies characterized by the fact that more than fifty percent of their respective share capital is owned by a controlling company, which is also a member of the Conglomerate. The controlling company of the Conglomerate may be a company with exclusive purpose or a bank constituted in the country; e) Employer: Natural or legal person who agrees through a contract or institutional plan to make contributions to the individual account of a natural person with whom they maintain a labor relationship; f) Funds: Voluntary Previsional Savings Funds; g) Business Group: In accordance with Article 5 letter n) of the Securities Market Law, it is one in which a company or set of companies have a common controller, who acting directly or indirectly participates with fifty percent as minimum in the share capital of each of them or that have common shareholders who, directly or indirectly, are holders of fifty percent as minimum of the capital of another company, which allows presuming that economic and financial performance is determined by common interests or subordinate to the group; h) Administrator Institution: Financial institution that offers Voluntary Previsional Savings Funds which are registered in the Public Registry of the Superintendence of the Financial System. The administrator institutions that may offer Voluntary Previsional Savings Funds are those indicated in Article 2 of these Standards; i) Intermediary: Natural or legal person whose object is the realization of financial instrument intermediation, whose basic function is to contact those who wish to buy with those who wish to sell and perfect the respective operation, receiving for their services a commission, if applicable; j) Funds Law: Investment Funds Law; k) SP Law: Comprehensive Pension System Law; l) Management Body: Collegiate body in charge of the administration of the entity, with functions of supervision, direction, and control or equivalent body. For the purposes of these Standards, it refers to the Board of Directors or Board of Administration; m) Participant: Natural person in whose name the individual voluntary previsional savings account is
located; n) Related or linked persons or entities: Refers to persons or entities in which another company, without controlling it, participates in its social capital, directly or through other companies. For the purposes of each of the applicable subjects of these standards, the provisions of Article 204 of the Bank Law, Articles 50 and 161 of the Law on Cooperative Banks and Savings and Credit Societies, Article 5 of the Securities Market Law, Article 90 of the Comprehensive Pension System Law, and Article 29 of the Investment Funds Law must be considered; o) Investment Policy: Corresponds to the guidelines defined in the Prospectus of each Fund, which indicates the characteristics and diversification of the values in which the Voluntary Previsional Savings Fund invests, the minimum and maximum limits of investment in each of the types of assets; p) Prospectus: Corresponds to the instrument containing the characteristics of each Voluntary Savings Fund, as well as the description of its functioning; and q) Superintendence: Superintendence of the Financial System.

CHAPTER II
PERMITTED INVESTMENTS AND MECHANISMS

Permitted investments and operations
Art. 4.- Investments with resources from the Funds, without prejudice to the amounts kept in cash, current account deposits, savings, or time deposits, may be made in a stock exchange or organized markets in El Salvador or abroad, or over-the-counter.

In accordance with what is established in the Securities Market Law, organized markets are considered to be stock exchanges, electronic markets, over-the-counter markets, or their equivalent, which have similar or superior regulatory and supervision requirements compared to those of El Salvador.

In the case of Open Investment Funds, participation shares may be acquired directly from their managers or administrators.

Art. 5.- The resources of the Funds may be invested in accordance with the investment policy in the following values:
a) Values issued or guaranteed by the State of El Salvador or by autonomous institutions of El Salvador; b) Values issued by the State of El Salvador and the Central Bank of Reserve of El Salvador, placed over-the-counter; c) Bonds and other values issued or guaranteed by local banks; d) Bonds and other values issued or guaranteed by cooperative banks, savings and credit societies, and federations regulated by the Law on Cooperative Banks and Savings and Credit Societies; e) Values representing the individual participation of the investor in a collective credit of Salvadoran companies or values that represent participation in the equity of Salvadoran companies, such as bonds and shares; f) Participation shares of Open or Closed Funds; g) Values issued in a securitization process, in accordance with Salvadoran regulation; h) Repos with values, defined in the Fund's Prospectus; i) Values issued or guaranteed by foreign states, central banks, or foreign banking entities or international organizations; shares and bonds issued by foreign companies; values issued in a securitization process abroad and participation shares of foreign investment funds; and j) Other public offering values that the Committee of Standards of the Central Bank may authorize through modification of these Standards.

In addition to the above, Funds may acquire shares and participation shares of Closed Investment Funds in the primary market. In the case of the exercise of preemptive rights, Funds that invest in the subscription of shares and participation shares due to capital increases may have the possibility to subscribe the proportional part corresponding to them directly with the Issuer, Managers, or administrators.

Art. 6.- The investments of the Funds must be carried out diligently in order to obtain a return, in accordance with the limits and investment policy defined for each Fund.

In case investments are made in international markets, they must comply with the required documentation and be subject to the regulations of the jurisdiction in which they are carried out. The analyses carried out to make such investments must be duly documented and available to the Superintendence when requested.

Art. 7.- The Administrator Institution is authorized to carry out repo operations on behalf of the Funds, which may be carried out with values defined in the Fund's Prospectus and in which the Funds will participate as lenders or sellers of Funds.

The Administrator Institution may carry out repo operations as borrowers, only to meet liquidity needs arising from the withdrawal of contributions by natural persons and employers or Fund expenses or other cases indicated in the Fund's Prospectus, which may not exceed twenty percent of the Fund's total assets.

The conditions of the operation, as well as the respective guarantees, must be established in accordance with what is regulated in the Securities Market Law, other laws, and applicable regulation for repo operations.

Mechanisms for trading values
Art. 8.- Investments in values with resources from the Funds must be carried out only if there is a documented analysis of their characteristics and risks and with the necessary information and experience for investment decision-making.

To carry out the Fund's investments, follow-up, and monitoring, tools, methodologies, and controls must be available that allow ensuring compliance with the criterion taken to make the investments and to value the instruments to be acquired; if the foregoing is not met, the Administrator Institution must not enter into negotiations of such instruments.

Likewise, the Administrator Institution must ensure that commission and price conditions have been agreed upon with strict adherence to the interests of the participants and in accordance with established procedures.

Liquidity requirements for investments
Art. 9.- Funds must maintain at least twenty percent of their resources in cash, bank deposits, and high-liquidity, low-risk values.

For these purposes, high-liquidity, low-risk values are understood to be those that meet the following requirements:
a) That the values have a maturity to expiration of less than 365 days; b) That they can be received as collateral in passive operations; c) That their market price can be obtained through one or more price provider sources, a recognized international stock or financial information system by the Superintendence, or, failing that, can be obtained from a previously established methodology or other reliable price source; and d) That foreign values must be investment grade and that local debt instruments have a long-term risk classification no lower than category BBB and N-2 for short-term instruments.

Notwithstanding what is established in the second paragraph of this article, additionally, participation shares of open investment funds, both national and foreign, are considered high-liquidity, low-risk values, which contemplate redemption payment periods not exceeding ten business days from the submission of the request, provided that, in the Internal Regulations, or the corresponding document in the respective jurisdiction, there are no restrictions preventing it. (2)

Investments whose maturity is one year or less, issued by the State of El Salvador and by the Central Bank of Reserve of El Salvador, are also considered liquid.

In case any of the values considered high-liquidity, low-risk cease to meet the requirements established in this article, the Administrator Institution, in order to maintain the minimum limit established in this article, must substitute the referred values no later than within five business days following the detection of the non-compliance.

The Administrator Institution, for diversification purposes, must define in the investment policy the maximum limit of deposits that may be maintained in the same banking entity, in order to manage possible concentration risk.

Basic conditions of operability
Art. 10.- The values in which the Fund's resources are invested, when corresponding according to their nature, must be delivered in custody to an authorized or recognized entity to provide this service, which meets the conditions established for the custody and deposit of values of the instruments in which Pension Funds invest, in accordance with what is established in Article 137 of the SP Law and the current regulation on Deposit and Custody of Values for the Pension System.

Likewise, the custody of values must be maintained in separate accounts by Fund and must be duly identified to the corresponding Fund, in accordance with what is established in the fourth paragraph of Article 137 of the SP Law.

Art. 11.- The Administrator Institution must establish separate bank accounts for each Fund, in which the total contributions to the same, the proceeds from its investments, and all other income received in the name of the Fund must be deposited directly. From these accounts, withdrawals may only be made for the acquisition of instruments or financial operations carried out in the name of the Fund, for the withdrawal from individual accounts, for the payment of commissions of the Administrator Institution, and for other expenses established in the Fund's Prospectus.

The identification of the bank accounts of each Fund must consider what is established in the fourth paragraph of Article 137 of the SP Law.

Each Administrator Institution with reference to the Funds it administers is obligated to comply with the following requirements:
a) Comply with the responsibilities derived from the compensation and settlement processes of the transactions carried out; b) The approval of the delegation by the Administration in favor of authorized employees to make bank transactions, including limits and the use of joint signatures; and c) Design an information and monitoring system with daily and detailed updates of resources, transactions, documentation of failures and errors with the application of necessary corrections for each Fund.

Investment control
Art. 12.- The Administrator Institution, for the control of investments made on behalf of each Fund, must maintain the documentation, record, or proof of the transaction containing the detailed information of the operations it carries out, for which it must maintain an updated investment register, in which the entries or income and exits or expenses of the investment operations must be specified in chronological order, indicating the amount of the purchase or sale, taxes when applicable, and expenses incurred in the investment operation, as well as the necessary information to identify that the investments made comply with what is stated in the investment policy, in accordance with what is established in the "Technical Standards for the Submission and Dissemination of Information of Voluntary Previsional Savings Funds" (NSP-61), approved by the Central Bank through its Committee of Standards.

In addition, it must design a control system on investment and liquidity limits, property rights of the investments (coupons, dividends), risk classification of the instruments and companies where the values are deposited, among others.

The information regarding the investments made by the Administrator Institution on behalf of each Fund must be available to the Superintendence when requested. Likewise, the Administrator Institution must document the aspects considered in the investment process.

The Administrator Institution, for the control of investments made on behalf of each Fund, must ensure that the orders issued have been executed by the Intermediary as requested.

At the time of closing the operation, the Intermediary must send a written confirmation to the Administrator Institution of the transaction carried out.

CHAPTER III
INVESTMENTS ABROAD

Requirements for foreign investments
Art. 13.- To make investments in values from issuers abroad, the financial instrument must be registered in an organized market of a country that has similar or superior supervision requirements compared to those of El Salvador and that said country also has a minimum risk classification of BBB- or its equivalent, provided that they have been granted by foreign risk rating agencies, recognized by the Securities and Exchange Commission (SEC) of the United States of America, or that they have been granted by foreign risk rating agencies that are registered in the market regulator of their respective country of origin.

Art. 14.- The Administrator Institution, for the purpose of making investments of the Funds abroad, must consider at least the following aspects:
a) Have a service with an international stock or financial information system recognized by the Superintendence, which allows it to access price and relevant event information of the foreign values it trades; b) Have policies and procedures on investments and risks duly approved by the Management Body, which explicitly incorporate aspects related to the investment in foreign values; c) Sign a contract with a securities deposit and custody company that provides the service abroad; and d) Sign a contract with the selected intermediary.

The Administrator Institution must document the analyses that attest to the selection of intermediaries, in accordance with the requirements established in Article 16 of these Standards, and keep this information available to the Superintendence when requested.

Investments in quotas of foreign investment funds

Art. 15.- To make investments in participation quotas of Foreign Investment Funds with resources from the Funds, the Administrator Institution must verify that the said Investment Funds meet at least the following requirements:

a) The Investment Fund and the Manager or Administrator of the Investment Fund must have at least a BBB- risk rating or its equivalent, granted by an international risk rating agency recognized by the United States Securities and Exchange Commission (SEC); in the event of not having a rating, the Investment Fund must be constituted in a country whose risk rating is equal to or higher than that required for the Administrator or Manager;

b) The Manager or Administrator of the Investment Fund and the Investment Fund must be authorized and supervised by a regulatory body of a country, which has similar or superior supervision requirements with respect to those of El Salvador, in which they are registered;

c) The Investment Fund must specify in its offering prospectus for its participation quotas or in its bylaws, its debt policies, guarantee granting policies, and use of derivative instruments, which must be coherent and consistent with the fundamental aspects of the Investment Fund, such as objectives, policies, and name;

d) The Investment Fund must have a risk management report or similar document, which includes the evaluation of the assets that make up the Fund and the risks associated with it. The said report must be the most up-to-date, if available;

e) The Investment Fund must have a minimum operating period of one year and at least US$50 million in assets;

f) The Manager or Administrator of the Investment Fund must demonstrate a minimum of US$60 million in assets managed on behalf of third parties and a minimum of five full years of operation in the administration of said type of assets;

g) The Manager or Administrator of Open-End Investment Funds must specify in the internal regulations of the Investment Fund or similar document, the cases in which it will have the authority to suspend the redemption of participation quotas, in protection of the participants' interest, in cases of public unrest, bank or stock exchange closure, and other facts or abnormalities of a similar nature; and

h) The Manager or Administrator of Investment Funds must disseminate the value of the participation quotas on its website or by the means established according to the prospectus or applicable regulation; this without prejudice to the existence of information in recognized international stock or financial information systems by the Superintendence.

The Administrator Institution will be responsible for verifying compliance with the requirements established in this article. Likewise, it must verify that the administrators of Investment Funds with whom it contracts in international financial markets are authorized to trade.

Requirements of the intermediary

Art. 16.- The Administrator Institution, for the purpose of making investments of the Funds in organized markets abroad, may hire an investment intermediary in the foreign country, which must meet at least the following requirements:

a) That they be legal entities that are registered and supervised by the relevant supervisory bodies of the country where they are constituted;

b) That they are subject to minimum capital requirements relative to both their patrimony and the type of operations they carry out;

c) That they have experience, not less than ten years, in the provision of investment intermediation services;

d) That they have access to electronic real-time information systems, regarding the price of the financial instruments they trade; and

e) That they operate in markets of countries that have a minimum risk rating of BBB- or its equivalent, provided that they have been granted by foreign risk rating agencies, recognized by the United States Securities and Exchange Commission (SEC) or that they have been granted by foreign risk rating agencies that are registered with the securities market regulatory body of their respective country of origin.

The verification of the aforementioned requirements will correspond to the Administrator Institutions when operating with these intermediaries.

Minimum content of the contract with the intermediary

Art. 17.- The contract signed by the Administrator Institution with the selected intermediary must contain as minimum elements the following:

a) The obligation of the intermediary to act in accordance with the instructions provided by the Administrator Institution;

b) The obligation of the intermediary to send to the Administrator Institution the confirmation of the transaction on the date it is carried out and the supporting documentation;

c) Information security provisions to guarantee the integrity, transfer, and availability of information;

d) Remuneration or commission to be paid to the intermediary;

e) Term of the contract;

f) Clauses for suspension and termination of the contract, as well as their legal consequences; and

g) Detail of the Laws and regulations by which the contract will be governed.

It will be the responsibility of the Administrator Institution, when signing a contract with an intermediary, to establish all additional contractual provisions it deems necessary and to ensure, at all times, that these do not contravene what is provided in these Standards, in order to safeguard the security and efficiency in the administration of the investments of the Funds.

CHAPTER IV
RISK HEDGING OPERATIONS OF INVESTMENTS

Derivatives for risk hedging

Art. 18.- The Administrator Institution may carry out operations with derivatives of the forward, futures, swaps, and options type that have as their exclusive object the hedging of risks of the investments of the Funds. Investment in said derivative instruments may be made in organized markets in El Salvador or abroad, such as stock exchanges, electronic markets, over-the-counter markets, or their equivalent, which have similar or superior supervision and regulation requirements with respect to those of El Salvador, in accordance with specific provisions on market recognition and information systems determined in the "Technical Standards for the Trading of Foreign Securities" (NDMC-12), approved by the Central Bank through its Standards Committee.

To carry out operations in derivative instruments, the investment administrator must know their functioning and have the necessary means for their valuation, risk identification, measurement, and capacity to ensure compliance with the criterion taken to value the instruments; if the foregoing is not met, the Administrator Institution must not carry out operations with such instruments. In the event that hedging operations are carried out in international markets, they must comply with the required documentation and be subject to the regulations of the jurisdiction in which they are carried out.

The analyses carried out to carry out operations with derivative instruments must be duly documented.

Art. 19.- Risk hedging operations of the Fund's investments may be carried out through master agreements, preferably following international market standards, and must be subject to the following conditions:

a) Contracts entered into within a centralized mechanism must have as counterparty an entity authorized and supervised by the Superintendence, or in the case of operations abroad, by an entity of superior or similar competence to the Superintendence. Contracts entered into outside a centralized mechanism must have as counterparty an entity authorized by the Superintendence, or in the case of operations abroad, by an entity constituted in countries that are members of the Financial Action Task Force (FATF) or any equivalent regional-based intergovernmental organization, destined to combat money laundering and asset financing, and terrorist financing, and that are not considered by these organisms as jurisdictions presenting strategic deficiencies in the prevention, detection, and control of money laundering, terrorist financing, and financing of the proliferation of weapons of mass destruction, referred to as high-risk or non-cooperative jurisdictions;

b) Be associated with a type of risk of an instrument or group of instruments that are considered in the Investment Policy;

c) A hedge of the same underlying asset may be structured in at most two currencies;

d) That in the case of contracts entered into in stock markets, their settlement be through a Clearing House, which is duly authorized and supervised by the Superintendence or an entity of similar competence to the Superintendence within the country where they have been constituted; and

e) That in the case of contracts entered into outside a centralized mechanism, the settlement process must be a financial settlement.

Control of derivatives

Art. 20.- The Administrator Institution, for the control of the derivative operations referred to in this chapter, must maintain the documentation and record containing the detailed information of the operations it carries out, clearly indicating their characteristics and the minimum requirements established in the "Technical Standards for the Submission and Disclosure of Information of Voluntary Previsional Savings Funds" (NSP-61), approved by the Central Bank through its Standards Committee. The aforementioned information must be available to the Superintendence when it so requests.

CHAPTER V
INVESTMENT COMMITTEE AND INVESTMENT ADMINISTRATORS OF VOLUNTARY PREVISIONAL SAVINGS FUNDS

On investment administrators

Art. 21.- For a natural person to act as administrator of the Fund's investments, they must work for an Administrator Institution authorized to offer Voluntary Previsional Savings Funds, be previously authorized by the Superintendence to perform the function of investment administrator, and be registered in the Registry.

The Administrator Institution, for the purpose of requesting the Superintendence's authorization of the Fund's Investment Administrator and their inscription in the corresponding Registry, must comply with the requirements and procedure for the authorization to administer financial Funds, established in the "Technical Standards for the Authorization and Registration of Investment Administrators of Investment Funds" (NDMC-03), approved by the Central Bank through its Standards Committee.

For these purposes, when NDMC-03 refers to Investment Fund Manager and investment administrators of Investment Funds, it shall be understood that it is applicable to Administrator Institutions and investment administrators of Voluntary Previsional Savings Funds.

Art. 22.- Investment Administrators of Investment Funds that have been authorized by the Superintendence prior to the effectiveness of these Standards and who are working for an authorized Manager to offer Voluntary Previsional Savings Funds, may administer said Funds, provided that the Administrator Institution presents to the Superintendence a request to modify their entry in the Registry, signed by its legal representative or attorney-in-fact, in which it indicates the Fund or Funds and the assets that will be administered by the investment administrator, for which they have demonstrated knowledge and experience.

Once the request is presented, the Superintendence will proceed to analyze and resolve the request in accordance with what is established in the "Technical Standards for the Authorization and Registration of Investment Administrators of Investment Funds" (NDMC-03), approved by the Central Bank through its Standards Committee.

Art. 23.- The Administrator Institution will establish the main functions that, as a minimum, must be fulfilled by the investment administrators of the Fund, who, in addition to complying with the provisions established in Article 8 of these Standards, must consider as a minimum the following:

a) Analyze and identify investment opportunities, in accordance with the guidelines of the Investment Committee and the Fund's investment policy;

b) Make investment decisions in accordance with what is established in the Fund's investment policy;

c) Propose to the Investment Committee modifications to the investment policy, if necessary;

d) Supervise and ensure that recommendations issued by the risk unit are implemented, informing the Investment Committee of the corresponding justifications in case they decide not to adopt them;

e) Prepare a report for the Investment Committee, describing the management carried out in accordance with their functions, which must respect the periodicity and minimum content established in the organization and procedures manuals, according to the segregation of functions; and

f) Propose the necessary strategies for regularization in case of non-compliance with investment policies.

The functions of the members of the Investment Committee or those acting on their behalf and of the investment administrators are indelegable and in case of not fulfilling them, they may be removed by the Governing Body of the Administrator Institution.

Investment Committee

Art. 24.- The Governing Body of the Administrator Institution will be responsible for ensuring compliance with the investment policy and the adequate exercise of the investment administration functions of the Fund.

For these purposes, it may constitute an Investment Committee that will be responsible for evaluating, recommending, and approving guidelines for making investment decisions, which will be executed by the Fund's investment administrators.

The Administrator Institution will have the authority to appoint the Investment Committee, which will be composed of a minimum of three members and their respective alternates, who must have capacity and knowledge related to the type of assets in which the Fund invests and be ratified annually by the Governing Body of the Administrator Institution.

The Administrator Institution through its Governing Body must approve the Regulations for the Investment Committee, which must contain as a minimum the duties, obligations, periodicity of meetings, policies for the selection of Committee members, number of members, voting scheme, analysis mechanisms or indicators, and the periodicity and minimum content of the reports that the investment administrator must present, all the aforementioned information must be kept in minutes and their respective backups.

The Administrator Institution must document in the organization and procedures manual the composition of the Investment Committee, defining its responsibilities and attributes.

Requirements for members of the Investment Committee

Art. 25.- The Administrator Institution must ensure that the members of the Investment Committee act with diligence, skill, and reasonable care in the exercise of their functions and meet at least the following requirements:

a) Be of recognized honorability;

b) Have a university degree registered or incorporated in the Ministry of Education for the case of degrees in the country. In the event that the degree was obtained abroad, it may be admitted without the need for legalization or apostille, provided that it has electronic verification mechanisms or other validation means established by the issuing entity, which allow verifying its authenticity, integrity, and content. When it is not possible to carry out such verification, they must comply with legalization or apostille formalities, as appropriate, according to their nature and country of origin;

c) Have at least three years of experience and knowledge in topics related to the financial sector, stock market, pension market, and investment administration;

d) Not have been judicially qualified as responsible for negligent or fraudulent bankruptcy;

e) Not have been convicted by a final judgment in the country or abroad, for having committed or participated fraudulently in the commission of any crime;

f) Not have been judicially convicted for their participation in infractions of laws and norms of a financial nature;

g) That it has not been judicially proven that they participated in activities related to drug trafficking and related crimes, and with money laundering, in the country or abroad; and

h) Members of the Investment Committee may participate as members of other Investment Committees of other funds, provided that they are administered by the same Administrator Institution.

Functions

Art. 26.- The Administrator Institution will establish the main functions that, as a minimum, must be fulfilled by the members of the Investment Committee or whoever acts on their behalf, considering as a minimum the following:

a) Define the general investment guidelines of the Fund, supervise the work of the investment administrator, and ensure the adequate performance of the portfolio;

b) Propose to the Governing Body the valuation methodology of the Fund's investments, in accordance with what is established in the "Technical Standards for the Authorization, Registration, and Operation of Voluntary Previsional Savings Funds" (NSP-59) issued by the Central Bank through its Standards Committee, in cases where information regarding the price or quotation of any instrument or operation by an agent specialized in securities valuation or the corresponding information systems is not available;

c) Approve the Fund's investment strategy, based on the investment policy established in the Prospectus;

d) Approve the mechanisms to evaluate possible investments of the Fund;

e) Give adequate follow-up to the assets that make up the Fund's investments;

f) Evaluate if the recommendations of the risk unit are taken into account, if not, evaluate the respective justifications;

g) Supervise the management of the treasury;

h) Supervise compliance with the Fund's investment policy, as well as the fulfillment of the objectives set;

i) Propose the carrying out of audits in the Fund's investments;

j) Evaluate the necessary strategies for regularization in case of non-compliance with investment policies; and

k) Present to the Governing Body, reports on the investments made, in the periodicity determined by the Administrator Institution.

Applicable principles

Art. 27.- Members of the Fund's Investment Committee or those acting on their behalf, in the exercise of their functions, must observe the following principles:

a) Confidentiality: They must keep confidentiality and reserve during the exercise of their functions. The same principle must be applied in the communications required to execute the Fund's investment decisions;

b) Independence: This means that members of the Investment Committee, in order to avoid conflicts of interest, cannot provide their services to persons linked to the Administrator Institution, unless they are expressly authorized by the Governing Body, in which case, it must be previously disclosed and when these persons are participants of the Fund, they cannot exercise the right to vote; and

c) Autonomy: Implies that the investment decisions made by the investment administrator and the members of the Investment Committee are without subordination to third-party interests. For these purposes, investment decision-making is understood as the adoption of the agreement to acquire, hold, or dispose of assets for the Fund's portfolio or the managed portfolio and in accordance with the investment policy.

Meetings

Art. 28.- The Investment Committee or those acting on their behalf must meet at least once per quarter and draw up minutes of each session, which must guarantee their authenticity and veracity; likewise, they must be kept in places that ensure their adequate conservation.

The minutes documenting the agreements of the Investment Committee must include the detail to understand the foundations of the agreements taken, must implement a sequential numbering system of the meeting minutes, and must include as a minimum the following aspects:

a) Place, date, and time of the session;

b) Agenda of the session;

c) Information supporting the sessions;

d) Matters discussed;

e) Voting results;

f) Agreements taken, as well as observations or incidents that occurred; and,

g) Name and signature of the attendees.

The Administrator Institution will be responsible for having the minutes, reports, and supporting documentation of the topics reviewed.

CHAPTER VI
INVESTMENT LIMITS

Investment Limits
Art. 29.- The Administrator Institution shall establish limits for investments that can be made with resources from the Funds in relation to, among others, the assets of these funds, the issuer's assets, the same issuer, and the business group or conglomerate.

These limits must be established within the Fund Prospectus, as part of its object and investment policy, and must adhere to the following percentages:
a) At least twenty percent of its resources must be kept in cash, bank deposits, and liquid securities that comply with what is established in article 9 of these Standards; b) Limits in relation to the assets of the Voluntary Previsional Savings Fund:
i. The Fund cannot hold debt securities representing more than eighty percent of the Fund's assets; and

NSP-60
TECHNICAL STANDARDS FOR INVESTMENTS OF VOLUNTARY PREVISIONAL SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022

ii. The Fund cannot hold shares representing more than fifty percent of the Fund's assets. (1)
c) Limits in relation to the issuer's assets and the same issuer:
i. The Fund cannot hold debt securities representing more than thirty percent of the issuer's assets based on the latest Financial Statements published by the issuer. This percentage is also applicable to the investment that a Fund can make in the same issuance of securities. These limits include repo operations; and
ii. The Fund shall not directly or indirectly hold shares of the same company above twenty percent of the issuer's assets.
d) Limits in relation to the business group or conglomerate:
i. The Fund shall not hold more than twenty-five percent of its total assets in securities issued or guaranteed by companies belonging to the same financial conglomerate or business group different from the one the Administrator Institution belongs to; this limit includes securities issued from independent estates administered by these companies, such as Investment Funds and Securitization Funds, as well as money deposits in the bank of the referred conglomerate. Securities that guarantee repo operations are also included. Current or savings accounts used for the Fund's operationality are exempt from this limit; and
ii. The Fund may hold up to ten percent of its total assets in fixed-income securities issued by a related entity, provided that these instruments are investment grade in the case of foreign securities and local debt instruments have a long-term risk classification no lower than category BBB and N-2 for short-term instruments.
e) The Fund shall not hold above fifty percent of the total participation shares issued by the same Investment Fund.
Additionally, the sum of participation shares acquired by funds managed by an Administrator Institution cannot exceed fifty percent of the participation shares issued by the same Investment Fund. In case that investments in participation shares are from Investment Funds managed by the same Administrator Institution, this must be communicated to the natural persons and employers who make contributions to the Fund; and f) The Fund may hold securities from the same Securitization Fund up to fifty percent of the assets of the Securitization Fund. The sum of the securitization securities acquired by funds managed by an Administrator Institution cannot exceed fifty percent of the securities issued by the same Securitization Fund. This type of securities will not be included within the debt securities indicated in letters b) and c) of this article.

NSP-60
TECHNICAL STANDARDS FOR INVESTMENTS OF VOLUNTARY PREVISIONAL SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022

The Administrator Institution shall be responsible for ensuring that investments in securities made with Fund resources comply with the limits established in this article.
Art. 30.- Funds may invest their resources in the same type of instrument, respecting the limits established in these Standards.
Investments made by Funds in the securities established in letter i) of article 5 of these Standards cannot exceed eighty percent of the Fund's assets. Additionally, investments by type of instrument must adhere to the limits established in article 29 of these Standards.
The Administrator Institution is responsible for controlling investment limits on a daily basis.

Timeframe for Compliance with Limits
Art. 31.- Investment limits must be complied with by the Administrator Institution, within the timeframe contemplated in the investment policy.
For the purposes of applying the limits indicated in this Chapter, the registered issuance of the securities in question shall be considered.

Investment Policy
Art. 32.- The investment policy, defined in the Prospectus of each Fund, must consider, among others, the following minimum aspects:
a) Fund Objective; b) Investment portfolio structure; c) General criteria for the selection of Fund investments, such as:
i. Conditions that titles and/or securities and issuers (national and foreign) must meet, such as: risk classification category, identification with respect to the financial conglomerate or business group to which they belong, corporate governance standards, origin of the instruments, concentration by industry or economic sector of issuers, and conditions of the underlying assets of collective investment funds, investment funds, or other collective investment schemes;
ii. Conditions that collective investment funds, investment funds, or other collective investment schemes must meet, including those related to commissions and their refund; and
iii. Markets in which the Administrator Institution will carry out investment negotiations, including those carried out in integrated markets.
d) Criteria adopted for the selection of Intermediaries;

NSP-60
TECHNICAL STANDARDS FOR INVESTMENTS OF VOLUNTARY PREVISIONAL SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022

e) Organizational structure for investment management and risk administration; f) Minimum and maximum investment limits in each of the types of assets contemplated in article 5 of these Standards. The Administrator Institution must clearly describe the consistency between these limits and the Fund's objectives; g) Procedure to restore investment excesses; h) Internal control of compliance and modification of the Investment Policy; and i) Identification of the external auditor. The Administrator Institution shall be responsible for revealing to the natural persons and employers who make contributions to the Fund the investment policy of the same, the investor profile to which the Fund is directed, avoiding making statements that could lead to false, misleading, or inaccurate appraisals about the Fund's characteristics, indicating that the originally contributed amount may increase or decrease depending on the Fund's financial result. Additionally, they must inform about the functioning, risks, and characteristics of the Funds, as established in the “Technical Standards for the Authorization, Registration, and Operation of Voluntary Previsional Savings Funds” (NSP -59), approved by the Central Bank through its Norms Committee. The Administrator Institution must disclose the investment policy of each of the Funds it manages, through its Web page, in an easily accessible location with a link that allows direct access to these policies. These policies can be included in a general document as long as it clearly identifies the specific elements applicable for each type of Fund.

Compliance with Investment Policy
Art. 33.- The Administrator Institution, in order to ensure compliance with the investment policy, must ensure the following:
a) Maintain control of the Fund's assets, detailing their characteristics, ownership, price, compensation and settlement process, as well as information on their custody; b) That the securities in the Fund's investment portfolio are properly custodied by an authorized or recognized entity to provide this service, which meets the conditions established for the custody and deposit of securities of the instruments in which the Pension Funds invest, when applicable; c) Keep strict confidentiality of information about the Fund and its participants that comes to their knowledge due to their functions; d) Have an internal auditor's report, in which the compliance with the investment policy is specified, or, in its absence, follow up on the recommendations and observations made therein; and

NSP-60
TECHNICAL STANDARDS FOR INVESTMENTS OF VOLUNTARY PREVISIONAL SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022

e) Communicate to the Superintendence any irregularity detected regarding investment administration, no later than the next business day after knowing the fact; as well as provide any information that the Superintendence requires related to said functions.

CHAPTER VII
INVESTMENT EXCESSES

Identification and Communication of Investment Excesses Art. 34.- If excesses occur regarding the investment limits indicated in the respective Fund prospectuses, due to market fluctuations or another justified cause, the Administrator Institution must notify and inform its plan to reduce the excess to the Superintendence within three business days following the occurrence of the excess, indicating in the same the cause of the excess, the effect on Fund participants, and the activities that will be carried out to reduce the excess. The Administrator Institution will have a period of up to ninety days, counted from the date the excess occurred, to regularize it to the established percentages. The period may be extended for justified cause and when authorized by the Superintendence. The Administrator Institution cannot make new acquisitions of instruments from the entities or instruments involved in the excess until its situation is regularized. In cases where excesses do not obey the reasons mentioned in the previous paragraph and are caused by investment administrator errors, the Administrator Institution, without prejudice to any sanctions that may apply, must regularize the Fund's situation within a period of up to ninety days, counted from the date the excess occurred, to regularize it to the established percentages. The period may be extended for justified cause and when authorized by the Superintendence. The Administrator Institution, for the purposes of regularizing the Fund's investments to the established percentages, may acquire for itself the instruments in excess or the investments not foreseen in the Fund's investment policy. In case that investment excesses are caused by investment administrator errors, the acquisition of said instruments must be made at the highest value recorded in its valuation during the excess stage or of the investment not foreseen in the Fund's investment policy. In the case that an investment excess occurs and while it lasts, the Administrator Institution must inform this situation to the natural persons and employers who make contributions to the Fund, as well as the effect of regularization through the account statement, its Web page, or other means established in the Prospectus.

NSP-60
TECHNICAL STANDARDS FOR INVESTMENTS OF VOLUNTARY PREVISIONAL SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022

Justified Investment Excesses or Not Attributable to the Administrator Institution Art. 35.- Excesses in the investment limits defined in the Funds' investment policy occur due to causes not attributable to the Administrator Institution, in the following cases:
a) When, having acquired instruments within the established limits, variations in prices occur, causing excesses; b) When, having acquired instruments within the established limits, variations in exchange rates of foreign currencies in which the instruments or securities in which the Funds' resources are invested are expressed occur, causing excesses; c) When withdrawals of savings occur that represent significant amounts of the total equity, producing a decrease in total assets; d) As a consequence of changes in the corporate structure of the issuer in which the Fund has invested; e) In the case that any of the investments indicated in article 5 of these Standards ceases to meet any of the conditions to be considered as permitted; and f) Other cases in which the Superintendence, according to the justification provided by the Administrator Institution, determines that they were caused by causes unrelated to its management.

CHAPTER VIII
OTHER PROVISIONS AND VALIDITY

Obligations
Art. 36.- Administrator Institutions are obligated to supply timely and truthful information about the situation of the Funds they manage, according to what is established in the “Technical Standards for the Submission and Disclosure of Information of Voluntary Previsional Savings Funds” (NSP -61), approved by the Central Bank through its Norms Committee. The Administrator Institution in no case may directly dispose of the assets belonging to the Fund. In accordance with what is established in article 134 of the SP Law, the goods and rights that make up the Funds shall be unseizable. Art. 37.- Administrator Institutions must ensure that there is an adequate segregation of functions that allows:
a) To supervise that control and monitoring of the Fund's owned assets is carried out and reported to the Investment Committee; and b) To supervise that the valuation of the Fund's investments is made in accordance

NSP-60
TECHNICAL STANDARDS FOR INVESTMENTS OF VOLUNTARY PREVISIONAL SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022

with the applicable valuation methodology, according to the segregation of functions.

Information Submission
Art. 38.- The Administrator Institution must submit to the Superintendence information on investments and operations with derivatives that have the exclusive object of covering the risks of the investments made by the Funds, in accordance with what is established in the “Technical Standards for the Submission and Disclosure of Information of Voluntary Previsional Savings Funds” (NSP -61), approved by the Central Bank through its Norms Committee. Regarding investments made abroad, the Administrator Institution must submit to the Superintendence the prospectuses of foreign fixed and variable income security issuances, as well as foreign investment funds, by the means defined by it and no later than the next business day after having made the investment.

Recognition of Markets and Information Systems Art. 39.- For the purposes of these Standards, when reference is made to supervision requirements similar or superior to those of El Salvador and international stock or financial information systems recognized by the Superintendence, the aspects considered in the specific provisions on recognition of markets and information systems contained in the “Technical Standards for the Negotiation of Foreign Securities” (NDMC - 12), approved by the Central Bank through its Norms Committee, must be taken into account.

Sanctions
Art. 40.- Non-compliance with the provisions contained in these Standards will be sanctioned in accordance with what is established in the Law of Supervision and Regulation of the Financial System.

Repeal
Art. 41.- These Standards repeal the “Technical Standards for Investments of Voluntary Previsional Savings Funds” (NSP -25) approved by the Central Bank through its Norms Committee, in Session CN-09/2019, of May 28, 2019.

Unforeseen Aspects
Art. 42.- Aspects not provided for in regulatory matters in these Standards will be resolved by the Central Bank through its Norms Committee.

Validity
Art. 43.- These Standards will enter into force from the thirtieth of December of two thousand twenty-two.

NSP-60
TECHNICAL STANDARDS FOR INVESTMENTS OF VOLUNTARY PREVISIONAL SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022

MODIFICATIONS:
(1) Modification to roman ii. of letter b) of article 29 approved by the Central Bank through its Norms Committee, in Session No. CN-09/2023, of September 26, two thousand twenty-three, with validity from October 11, two thousand twenty-three.
(2) Modification to article 9 approved by the Central Bank through its Norms Committee, in Session No. CN-04/2024 of June 5, two thousand twenty-four, with validity from June 20, two thousand twenty-four.
(3) Modifications to articles 19 and 25, approved by the Central Bank through its Norms Committee, in Session No. CN-06/2026 of September 8, two thousand twenty-six, with validity from September 23, two thousand twenty-six.