Technical Standards for Pension Fund Investments

NSP-53
OF PENSION FUNDS
Approval: 12/30/2022
Validity: 12/30/2022

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

CONSIDERING:

I. That Article 7, subsection d) of the Law on Supervision and Regulation of the Financial System, establishes that Pension Fund Administrators are subject to the supervision of the Superintendence of the Financial System.

II. That by Legislative Decree No. 614, of December 20, 2022, published in Official Diary No. 241, Volume No. 437, of December 21, 2022, the Comprehensive Law of the Pension System was issued, by which the Pension System for workers in the private, public, and municipal sectors was created, which comprises the set of norms and measures that Pension Fund Administrators will apply.

III. That in accordance with Article 82 of the Comprehensive Law of the Pension System, the objective of Pension Fund investments is to obtain adequate profitability under conditions of due security, liquidity, and risk diversification.

IV. That in accordance with Article 82, twelfth subsection, of the Comprehensive Law of the Pension System, Pension Fund Administrators may acquire, with resources from Pension Funds, derivative instruments in organized markets in El Salvador or abroad, which have the exclusive objective of hedging the risks of the investments made.

V. That Articles 82, 83, and 84 of the Comprehensive Law of the Pension System establish the limits for the investment of Pension Fund resources and that each Pension Fund Administrator must comply with these.

VI. That Article 88 of the Comprehensive Law of the Pension System establishes that, within the limits established for the investment of Pension Funds, each Pension Fund Administrator will have freedom to design the investment policy of the Fund it administers, which must be kept available to the public.

VII. That Article 93 of the Comprehensive Law of the Pension System allows Pension Fund Administrators to hold in checking accounts and time deposits up to 360 days, up to a maximum equivalent to ten percent of the asset of the Pension Fund they administer.

VIII. That Article 159 of Legislative Decree No. 614, by which the Comprehensive Law of the Pension System was approved, establishes that the Central Bank of Reserve of El Salvador will issue the Technical Norms and Resolutions necessary to allow the development of what is established in the aforementioned Law.

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:

TECHNICAL STANDARDS FOR THE INVESTMENTS OF PENSION FUNDS

CHAPTER I
OBJECT, SUBJECTS, AND TERMS

Object
Art. 1.- These Standards aim to define the criteria and guidelines that will be applied to carry out investments with resources from Pension Funds by Pension Fund Administrators and to establish the minimum elements that Pension Fund Administrators must include in the document containing the Investment Policy of the Pension Fund.

Likewise, these Standards regulate the guidelines that Pension Fund Administrators must apply for the acquisition of derivative instruments in organized markets in El Salvador or abroad that have the exclusive object of hedging the risks associated with the investments of Pension Funds.

Subjects
Art. 2.- The subjects obliged to comply with the provisions established in these Standards are the Pension Fund Administrators.

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) AFP: Pension Fund Administrator; b) Central Bank: Central Bank of Reserve of El Salvador; c) Risk Classification: Financial analysis carried out by a Risk Classifier, whose main purpose is the risk classification of securities offered to the public, and the results of which are disseminated in the financial market. Internationally known as Credit Rating; d) Risk Committee: In accordance with Article 80 of the Comprehensive Law of the Pension System; e) Pension Fund: Refers to the Pension Fund mentioned in subsection g) of Article 2 of the Comprehensive Law of the Pension System; f) FSV: Social Housing Fund; g) Instrument or security: Financial instrument; h) Derivative Instruments: Financial operations whose value is determined by the value of other financial instruments known as underlying assets, which have the exclusive object of hedging the risks of the investments of Pension Funds and which, according to what is established in Article 82 of the Comprehensive Law of the Pension System, may be carried out in organized markets in El Salvador or abroad; i) SP Law: Comprehensive Law of the Pension System; j) Primary Market: That in which issuers and buyers participate directly or through brokerage houses, in the purchase and sale of securities offered to the public for the first time, in accordance with the Securities Market Law; k) Secondary Market: That in which securities are traded for the second or more times. In it, issuers are no longer the offerors of said securities, in accordance with the Securities Market Law; l) Equity of Pension Funds: Composed of the set of Individual Savings Accounts for Pensions, the Solidarity Guarantee Account, Transfer Certificates that have been made effective, and the profitability of their investments, minus AFP commissions, as applicable; m) SP: Pension System; n) Superintendence: Superintendence of the Financial System; and o) Previsional Titles: By type of securities including Transfer Certificates, Complementary Transfer Certificates, and Previsional Obligation Certificates.

CHAPTER II
GENERAL PROVISIONS

Art. 4.- Investments in securities acquired with Pension Funds must be carried out in a Salvadoran Stock Exchange; bank deposits and participation shares of open investment funds must comply with the requirements contemplated in the respective securities market legislation; have been subjected to a risk classification process where applicable; and be within the minimum classification established by the Risk Committee when applicable. Risk classification is exempt for Previsional Obligation Certificates.

Art. 5.- All instruments acquired by Pension Funds must comply with the requirements mentioned in the previous article and Article 87 of the SP Law. Additionally, preceded by the name of the corresponding AFP, in accordance with what is established in the second subsection of Article 82 of the SP Law.

Art. 6.- AFPs are authorized to invest the resources of Pension Funds in the securities market, in spot and cash operations, both in the primary and secondary markets, in accordance with what is established in the Securities Market Law and other applicable regulations.

Art. 7.- AFPs must report information on the investments they carry out in accordance with Article 19 of these Standards.

Art. 8.- The directors of an AFP, its managers, administrators, and in general, any person who by reason of their position or role has access to privileged information regarding the operations, policies, and investment strategies of Pension Funds, must keep absolute secrecy regarding these matters until such information becomes public.

Likewise, it is prohibited for the persons mentioned in the previous subsection to use, directly or indirectly, the reserved information to obtain for themselves or for others, other than the respective Pension Fund, advantages through the purchase or sale of securities. All of the foregoing without prejudice to the administrative, civil, and criminal actions that may arise.

Art. 9.- The investments that the AFP makes, with the resources of Pension Funds, in foreign securities and participation shares of Foreign Open and Closed Investment Funds, within the authorized investment limits, may be carried out in both United States dollars and foreign currency, in accordance with what the Risk Committee establishes. Such investments must comply with the regulations applicable to the Salvadoran Securities Market and to Investment Funds marketed in El Salvador.

Art. 10.- The commissions, expenses, and fees incurred by the AFP for the investments made with resources of Pension Funds, as well as the fees that deposit and custody societies charge for their services regarding financial instruments belonging to the Funds, will all be at the expense of the AFP.

Art. 11.- In accordance with Article 93 of the SP Law, each AFP may hold in checking accounts and time deposits up to 360 days, up to a maximum equivalent to ten percent of the asset of the Pension Fund it administers.

For diversification purposes, AFPs must establish within the Risk Management Policy a maximum percentage of concentration of time deposits up to 360 days in the same financial entity supervised by the Superintendence, in order to manage the respective concentration risk.

On Investment Limits
Art. 12.- AFPs are authorized to invest the resources of the Pension Funds they administer, according to the maximum limits within the ranges indicated in Article 82 of the SP Law established by the Risk Committee, and which are additionally subject to the provisions contained in the SP Law and in the Regulation on the Treatment of Excess Investments of Pension Fund Resources.

Investments in repos referred to in subsection l) of Article 82 of the SP Law, in addition to being registered within the global limit of the aforementioned subsection, will be considered within the calculation of limits by issuer, as applicable.

Securities intended for the financing of infrastructure works with State participation Art. 13.- According to the SP Law, securities intended for the financing of infrastructure works that have the participation of the State through any dependency of the Central Government are subject only to the requirement of risk classification, in accordance with what is established by the Risk Committee, considering that risk classification societies use the methodology established for the type of security to be issued, considering the characteristics of the security and its structuring.

Art. 14.- The Risk Committee will establish maximum limits, within the indicated ranges, for the following instruments:
a) The total investments in shares issued by companies whose debt is greater than five times their equity, between 0% and 10% of the asset of the Pension Fund; b) The total investments in participation shares of Investment Funds whose portfolio is concentrated in more than 50% in the development of new companies, between 0% and 5% of the asset of the Pension Fund; c) The total investments in debentures with a term of more than one year issued by Salvadoran companies; shares and bonds convertible into shares of Salvadoran companies; financial instruments of the insured mortgage system or insured mortgage certificates; public offering securities issued by Salvadoran securitization companies, and fiduciary participation certificates; and in other public offering instruments, whose issuer has less than three years of operation, the limit will be determined between 0% and 10% of the asset of the Pension Fund; and d) Others determined by the Risk Committee, between 0% and 10% of the asset of the Pension Fund.

In any case, the sum of investments in the instruments indicated in this article will be restricted to a maximum investment limit to be set between 5% and 15% of the asset of the Pension Fund.

Art. 15.- The Risk Committee will establish maximum limits, for the total investments of Pension Funds in Deposit Certificates and Securities, issued or guaranteed by the same entity or business group, within the following ranges:
a) Between 5% and 10% of the total asset of the Pension Fund; b) Between 5% and 20% of the asset of the issuer; and (1) c) Between 5% and 20% of the asset of the issuing business group. (1)

The Risk Committee will determine the limits for investments made with resources of Pension Funds in securities issued by Securitization Funds and Investment Funds, in relation to the asset of the Pension Fund. In this type of investments, limits relative to the asset of the issuer or business group indicated in letters b) and c) above will not apply.

Without prejudice to what is contemplated in the aforementioned subsections, the Risk Committee will establish investment limits, within the indicated ranges, for the investments of a Pension Fund in the following:
1) Securities of the same issuance, between 20% and 50% of said issuance;
2) Participation shares of the same Investment Fund, between 5% and 10% of the total asset of the Pension Fund; and
3) Direct or indirect investments in shares of the same company, between 5% and 15% of the capital of the issuing company.

Art. 16.- When two or more Pension Funds are administered by affiliated companies, the investment limits indicated in these Standards apply to the sum of the investments of all Pension Funds administered by said companies.

Art. 17.- It is prohibited for the AFP to invest the asset of the Pension Fund it administers in shares of the following entities:
a) Securities issued by the State, the Central Bank of Reserve of El Salvador, or any State Entity, with the exception of the Salvadoran Institute of Pensions; b) Pension Fund Administrators; c) Insurance Companies; d) Investment Fund Management Companies; e) Risk Classification Companies; f) Stock Exchanges; g) Brokerage Houses; h) Securities Custody and Deposit Companies; i) Price Providers; and j) Securitization Companies.

Likewise, the AFP may not grant or guarantee loans to its shareholders with resources from the Pension Fund, nor with its own resources.

Art. 18.- In addition to the above prohibitions, the AFP may not invest the resources of the Pension Fund it administers in securities issued or guaranteed by themselves or their subsidiaries, nor by legal entities directly or indirectly related to the ownership or administration of the respective AFP.

For the purposes of this article, entities will be considered related when they possess a minimum share ownership of three percent of the capital of the AFP, including the shares of the spouse and relatives in the first degree of consanguinity, in the case of natural persons, and the administration will be limited to that exercised by the directors or managers of the entity.

Related operations will also be considered the acquisition of securities issued or guaranteed by companies whose ownership is in any of the following circumstances:
a) The companies in which a shareholder of the AFP, their spouse, and relatives in the first degree of consanguinity, own ten percent or more of the shares with voting rights, and at least three percent of the shares of the AFP; b) The company in which a director or manager of the AFP, their spouse, or relatives in the first degree of consanguinity, own ten percent or more of the shares with voting rights; c) The company in which two or more directors or managers of the AFP, their spouses, or relatives in the first degree of consanguinity, jointly own twenty-five percent or more of the shares; d) The company in which the shareholders, directors, or managers of an AFP, their spouses, or relatives in the first degree of consanguinity, jointly own twenty-five percent or more of the shares, and ten percent or more of the shares of the AFP in question; and e) Resources of Pension Funds may not be invested in a company that is owned ten percent or more by another, in which the shareholders owning three percent or more of the AFP, the directors or administrators of the AFP, individually or jointly, own ten percent or more of the shares of the second referenced company.

Institutions or public companies of an autonomous nature are not considered related persons.

It is prohibited for the AFP to acquire, with resources of Pension Funds, securities of the related persons referred to in this article, which have as their object the development or alienation under any title of real estate. Likewise, the resources of Pension Funds may not be invested in securities issued or guaranteed by companies in which the AFP has share participation.

Notwithstanding the above, the AFP may invest resources of Pension Funds it administers in deposit certificates and securities issued by related banks and financial institutions, up to a total of ten percent of the asset of the Pension Fund; in turn, such investment must not exceed five percent of the asset of the bank or financial institution, whichever is greater, and at the same time must comply with the rest of the investment limits.

AFPs must keep a register of natural and legal persons related to their ownership and administration, in accordance with the current legal and regulatory framework.

On Information to the Superintendence
Art. 19.- AFPs will report to the Superintendence the purchase and sale movements of securities carried out with resources of Pension Funds, the valuation of the portfolio, the calculation of the share value and number of shares; as well as the collection of coupons and dividends generated by such investments, among others, in accordance with the formats and for the Information Request to Pension Fund Administrators for the Control of NSP-41), approved by the Central Bank through its Standards Committee.

CHAPTER III
MINIMUM ELEMENTS OF THE INVESTMENT POLICY OF PENSION FUND RESOURCES

Art. 20.- In accordance with what is established in Article 88 of the SP Law, within the limits established for the investment of the Pension Fund, each AFP will design and keep available to the public the Investment Policy of each type of Pension Fund it administers, in accordance with what is provided in Articles 26, 27, and 28 of these Standards.

Art. 21.- The Investment Policy of the Pension Fund must be framed within the limits and prohibitions established in the SP Law, the agreements adopted by the Risk Committee, and what is established in these Standards, with the objective of obtaining adequate profitability under conditions of security, liquidity, and risk diversification.

Art. 22.- Each AFP will send to the Superintendence the documents containing the Investment Policies of the resources of the Pension Fund containing the following minimum elements:
a) Name: Investment Policy of the Pension Fund AFP (Name of the AFP); b) Date of approval of the Investment Policy of the Pension Fund; c) Date of entry into force of the Investment Policy of the Pension Fund; d) Investment portfolio structure; e) List of positions of persons authorized to make investment decisions; f) Ethical and professional conditions required of internal or external personnel participating in the investment area; g) Internal control of compliance and modification of the Investment Policy of the Pension Fund, criteria and procedures to evaluate performance in investment management; h) Conflict of interest resolution policy, having as minimum elements the following:
i. Definition and identification of potential conflicts of interest, derived from the function of administering pension resources with access to privileged information;
ii. Criteria to prevent, manage, and overcome situations with conflict of interest that may affect the investment process, safeguarding at all events the interest of Pension Funds;
iii. Internal control procedures and norms that ensure adequate handling and resolution of conflicts of interest that may affect the AFP, its directors, managers, administrators, main executives, and in general, any person who, by reason of their position or role, has access to information on the investments of a Pension Fund that has not yet been disclosed to the market, and which by its nature is capable of influencing the quotations of the securities of said investments;
iv. Confidentiality and handling of privileged information; and
v. Existence of procedure manuals and codes of conduct that guide the prevention and resolution of conflicts of interest, as well as control parameters, if applicable.
i) Existence of procedure manuals, codes of conduct, and risk management:
i. Within the risk analysis for instruments in which the resources of Pension Funds are invested, standard measures of return adjusted by risk must be considered, such as: 1) Alpha, 2) Beta, 3) Sharpe Index;
j) Observance or non-observance of socio-environmental responsibility principles; and k) Extract of the Investment Policies of the Pension Fund that will be available to the public; this will be sent to the Superintendence each time the Investment Policy of the Pension Fund is modified.

Art. 23.- The Investment Policy of the Pension Fund may be modified by each AFP, for which it must inform the Superintendence and must be known to the public fifteen days in advance of the date of its entry into force.

Structure of the Investment Portfolio
Art. 24.- The Investment Policy of the Pension Fund must contain a section titled Structure of the Investment Portfolio, which shall include at least the following:
a) Objective: The AFP shall state the objective of the Investment Policy of the Pension Fund administered; b) Main characteristics of the Pension Fund's investment portfolio in terms of liquidity, term, and distribution between Fixed Income and Equity instruments; c) Distribution of the Pension Fund's investment portfolio:
i. Percentage of investments in medium and long-term securities to finance capital formation;
ii. Percentage of investments in medium and long-term securities to finance the acquisition of housing;
iii. Percentage of investments in Fixed Income Instruments;
iv. Percentage of investments in Equity Instruments; and
v. Structure of the total investment portfolio by type of instrument, in accordance with the instruments authorized in Article 82 of the SP Law.
d) Criteria for carrying out risk hedging operations with derivatives; e) Policy for the administration of repurchase agreements (repos); f) Main state, private, national, and foreign issuers in which investment will be made; g) Maximum economic term of the investment portfolio in Fixed Income instruments; and h) Limits: in the event that the AFP uses its own investment limits, these must at all times comply with the limits established by the SP Law and by the Risk Committee.

Responsibles for Making Investment Decisions
Art. 25.- The Investment Policy of the Pension Fund shall include the responsible parties by hierarchical level to make investment decisions according to investment amounts.

Internal Control of Compliance with the Policy Art. 26.- The Investment Policy of the Pension Fund shall indicate in its Internal Compliance Control the following:
a) Policies for the control of conflicts of interest; b) How the Investment Policy of the Pension Fund will be controlled by the AFP;

NSP-53
OF PENSION FUNDS
Approval: 30/12/2022
Validity: 30/12/2022 c) Risk classification of the instruments that make up the investment portfolio; and d) Modifications to the Investment Policy of the Pension Fund:
i. Review frequency; and
ii. Authorized responsible parties to conduct the review.
In accordance with Article 47 of the SP Law, each AFP must submit the Investment Policy of the Pension Fund and its modifications to the approval of its Board of Directors.

Information Available to the Public
Art. 27.- The AFP must include in the document submitted to the Superintendency an exact copy of the extract of the Investment Policy of the Pension Fund that will be kept available to the public.
The AFP must publish an extract of the Investment Policies of the Pension Funds, indicated in the preceding paragraph, on its website on the date it is submitted to the Superintendency, and the content thereof must not differ from that reported to the Superintendency. Art. 28.- In accordance with Article 73 of the SP Law, AFPs must maintain in their offices, in a place easily accessible to the public, an available extract containing a section regarding the Investment Policy of the Pension Fund and the composition of the investment portfolio. The section of the extract regarding the Investment Policy of the Pension Fund must contain, as minimum elements, the following:
a) Investment Policy of the Pension Fund: Detailing the objective and a general explanation of the Investment Policy of the Pension Fund that the AFP will execute; and b) Distribution of the Pension Fund's investment portfolio:
i. Percentage of investments in Fixed Income Instruments;
ii. Percentage of investments in Equity Instruments; and
iii. Structure of the total investment portfolio by type of instrument.
Art. 29.- In accordance with Article 73 of the SP Law, the composition of the Pension Fund's investment portfolio must be published quarterly in a national circulation printed newspaper or through the means established in the special law regulating the obligation of natural and legal persons of private law to comply with the principle of publicity, within a period of ten days counted from the last day of each quarter. The Investment Policy of the Pension Fund will be published annually.

NSP-53
OF PENSION FUNDS
Approval: 30/12/2022
Validity: 30/12/2022
Furthermore, each AFP may make the Investment Policy and the composition of the investment portfolio available to the public through its website.
Each AFP must publish on its website the name of the external auditor hired to opine on the financial statements of the company and the Pension Fund it administers, in accordance with Articles 46 and 88 of the SP Law.

CHAPTER IV
OPERATIONS FOR RISK HEDGING OF INVESTMENTS

Derivatives for Risk Hedging
Art. 30.- AFPs with resources from Pension Funds may carry out operations with derivatives such as forwards, futures, swaps, and options that have as their exclusive object the hedging of risks of Pension Fund investments. Investment in such derivative instruments may be carried out in organized markets in El Salvador or abroad, such as stock exchanges, electronic markets, over-the-counter markets, or their equivalent, in countries that have similar or superior supervision and regulation requirements compared to El Salvador, in accordance with specific provisions on the recognition of markets and information systems determined and negotiated by the Central Bank through its Standards Committee.

To carry out operations in derivative instruments, the AFP 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. 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. Analyses carried out to carry out operations with derivative instruments must be duly documented. Art. 31.- Risk hedging operations of Pension Fund investments may be carried out through master agreements, preferably following international market standards, subject to the following conditions:
a) Contracts entered into within a centralized mechanism must have as counterparty an entity authorized and supervised by the Superintendency, or, in the case of operations abroad, an entity of superior or similar competence. Contracts entered into outside a centralized mechanism must have as counterparty an entity authorized by the Superintendency, or

NSP-53
OF PENSION FUNDS
Approval: 30/12/2022
Validity: 30/12/2022 in the case of operations abroad, an entity constituted in countries that are members of the Financial Action Task Force or an equivalent regional intergovernmental organization, aimed at combating money laundering and asset trafficking, and terrorist financing, and that are not considered by these organizations as jurisdictions presenting strategic deficiencies in the prevention of money laundering and asset trafficking, and terrorist financing, referred to as high-risk or non-cooperative jurisdictions; b) Be associated with a type of risk or instrument or group of instruments that are considered in the Investment Policy of the Pension Fund; c) A hedge of the same underlying asset may be structured in a maximum of two currencies; d) That in the case of contracts entered into in stock markets, their settlement is through a Clearing House, which is duly authorized and supervised by the Superintendency or an entity of similar competence to the Superintendency 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. 32.- The AFP, for the control of operations with derivatives that have as their exclusive object the hedging of risks of Pension Fund investments, must maintain the documentation and records containing detailed information of the operations it carries out.

The information regarding the operations carried out by the AFP with derivatives that have as their exclusive object the hedging of risks of Pension Fund investments must be submitted to the Superintendency by the means and at the time this requires, in accordance with what is established in the Annex referred to as operations with derivative instruments that have as their exclusive object the hedging of Information to Pension Fund Administrators for the Control of NSP-41), approved by the Central Bank through its Standards Committee.

CHAPTER V
ON THE CALCULATION OF YIELD

Art. 33.- The nominal yield of the last thirty-six months of the Pension Fund will be the percentage variation of the average value of the share of one month, with respect to the average monthly value in the same month three years ago.

In annual terms, the formula is expressed as follows:

NSP-53
OF PENSION FUNDS
Approval: 30/12/2022
Validity: 30/12/2022

[ (1 + Rkt)^(12/36) - 1 ] * 100 = [ (VCkt / VCk(t-36))^(12/36) - 1 ] * 100 [Eq. 1]

Where:
Rkt = Nominal yield of the last thirty-six months of Pension Fund k in month t VCkt = Average monthly share value of Pension Fund k in month t.
VCk(t-36) = Average monthly share value of Pension Fund k in month t-36.

Art. 34.- The nominal yield of the last thirty-six months average of all Pension Funds will be determined by calculating the weighted average value of the yield of all Pension Funds. The weighting factor will be the proportion represented by the total value of the shares of each of the Pension Funds, in relation to the value of the shares of all Pension Funds, on the last day of the previous month. This proportion, for each Pension Fund, in no case must exceed the result of dividing two by the number of existing Pension Funds; the sums that exceed the established limit will be prorated as many times as necessary among the other Pension Funds, according to the total value of the share of each of them, excluding the Pension Funds in excess. The above restriction will apply when there are three or more Pension Funds.

In formula terms, it is expressed as follows:

Rt = Sum( (Fk(t-1) / Sum(Fi(t-1))) * Rkt ) * 100 k=1 to n

[Eq. 2]

Where:
Fk(t-1) = Value of Pension Fund k on the last day i of the previous month, t-1.
Rt = Nominal yield of the last thirty-six months average of all Pension Funds, calculated in month t.
Rkt = Nominal yield of the last thirty-six months of Pension Fund k, calculated in month t. n = Number of existing Pension Funds in month t with thirty-six or more months of operation.

NSP-53
OF PENSION FUNDS
Approval: 30/12/2022
Validity: 30/12/2022
= Proportion representing the value of Pension Fund k with respect to the total value of all Pension Funds, on the last day of the previous month (t-1)i.
2/n = Restriction, where n >= 3.

For:
Sum(Fk(t-1)) / Sum(Fi(t-1)) <= 2/n
[Eq. 3]

Art. 35.- The minimum required yield applicable to AFPs for the Pension Fund will be the lower of:
a) The annualized nominal yield of the last thirty-six months average of all Pension Funds, as applicable, minus four points; and b) The annualized nominal yield of the last thirty-six months average of all Pension Funds, as applicable, minus the absolute value of fifty percent of said yield.

In formula terms, it is expressed as follows:
RMkt = Min( Rt - 4%, 0.5Rt )
[Eq. 4]

Where:
RMkt = Minimum nominal yield of the last thirty-six months of all Pension Funds k in month t.
Rt = Annualized nominal yield of the last thirty-six months average of all Pension Funds, calculated in month t.

Without prejudice to what is established in this article, in the case that a Pension Fund has less than thirty-six months of operation, the aforementioned minimum yield will be calculated until it has operated for at least that period.

[ (Fk(t-1) / Sum(Fi(t-1))) * Rkt ] * 100 k=1 to n

NSP-53
OF PENSION FUNDS
Approval: 30/12/2022
Validity: 30/12/2022

CHAPTER VI
TECHNICAL ASPECTS OF ELECTRONIC INFORMATION TRANSFER

Art. 36.- Information between the AFP and the Superintendency for the purpose of valuing the instruments of the investment portfolio must be sent to the mailbox assigned to the AFP on the Superintendency's communication server.
Art. 37.- The structure of the fields that the file provided daily by the Superintendency with the values used for valuation will be as follows:
Name Description
Instrument Code The code used by the Superintendency to identify the instrument is specified.
Date Vector Date to which the instrument's price corresponds.
Instrument Value Price of the instrument.
ISIN Code International Securities Identification Code for public offerings.
Art. 38.- The structure of the fields that the file provided daily by the Superintendency, containing information on the daily Internal Rate of Return of the family to which each financial instrument belongs, will be as follows:
Name Description
Instrument Code The code used by the Superintendency to identify the instrument is specified.
Date Vector Date to which the instrument's price corresponds.
Yield Value Daily IRR of the family to which the instrument belongs.
Art. 39.- The Superintendency will send to the AFPs, with a copy to the Central Bank, the details related to the technical aspects of the electronic transfer of information, for the purpose of valuing the instruments of the investment portfolio, which will be communicated within a maximum period of thirty business days following the entry into force of these Standards. The details will be limited to the collection of information as regulated in these Standards.

CHAPTER VII

NSP-53
OF PENSION FUNDS
Approval: 30/12/2022
Validity: 30/12/2022
OTHER PROVISIONS AND VALIDITY

Art. 40.- Regarding investment in Pension Fund shares, the Special Guarantee Contribution, and those carried out by the AFP, the minimum yield guarantee established in Article 77 of the SP Law will not apply; nevertheless, the investment criteria indicated in these Standards will apply to them. Transitory on Investments in Progress Art. 41.- Pension Funds that, by virtue of the Pension Savings System Law issued by Legislative Decree No. 927 dated December 20, 1996, published in Official Gazette No. 243, Volume No. 333 of December 23, 1996, have the following values in their investments:
a) Securities issued by the General Treasury Directorate of El Salvador, traded either in a Salvadoran stock exchange or in organized international securities markets; b) Securities issued by the Central Reserve Bank of El Salvador. c) Securities issued or guaranteed by state-owned companies and autonomous official institutions, except those of the Development Bank of El Salvador and the Social Fund for Housing. d) Securities issued by the Development Bank of El Salvador. May conserve or negotiate in accordance with their investment policies. Sanctions Art. 42.- Non-compliance with the provisions contained in these Standards will be sanctioned in accordance with what is established in the Law on Supervision and Regulation of the Financial System.

Repeal
Art. 43.- Technical Standards for Pension Fund Investments -16), approved in Standards Committee Session No. CN06/2019 on March 27, 2019 by the Standards Committee of the Central Reserve Bank of El Salvador.

Transitory on Minimum Yield
Art. 44.- For the calculation of the minimum yield of the Pension Fund subsequent to the transfer of resources referred to in Article 151 of the SP Law, approved by Legislative Decree No. 614, dated December 20, 2022, published in Official Gazette No. 241, Volume No. 437 of December 21, 2022, the share values of the Conservative Pension Funds registered prior to the entry into force of said law will be used. Transitory for Adaptation

NSP-53
OF PENSION FUNDS
Approval: 30/12/2022
Validity: 30/12/2022

Art. 45.- AFPs will have a maximum period of sixty days from the entry into force of the SP Law to make the respective adjustments.
Unforeseen Aspects
Art. 46.- Unforeseen aspects in the matter of regulation in these Standards will be resolved by the Central Bank through its Standards Committee.
Validity
Art. 47.- These Standards will enter into force as of December 30, 2022.

(1) Modifications to letters b) and c) of Article 15, approved by the Central Bank through its Standards Committee in Session No. CN-01/2023, dated January 26, 2023, with effect from January 26, 2023.