Technical Standards for the Administration and Management of the Solidarity Guarantee Account

CNBCR-11/2022
NSP-44
TECHNICAL STANDARDS FOR THE ADMINISTRATION AND MANAGEMENT OF THE SOLIDARITY GUARANTEE ACCOUNT Approval: 12/30/2022 Validity: 12/30/2022

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

CONSIDERING:
I. That by Legislative Decree No. 614, dated December 20, 2022, published in the Official Journal No. 241, Volume No. 437 on December 21, 2022, the Comprehensive Law of the Pension System was approved.
II. That Article 2, letter l) of the Comprehensive Law of the Pension System establishes that said System will have a Solidarity Guarantee Account, which will finance benefits, according to the provisions of the aforementioned Law and will be part of the Pension Fund.
III. That Article 75 of the Comprehensive Law of the Pension System establishes that each Administrator will manage a Pension Fund composed of the set of Individual Savings Accounts for Pensions, contributions to the Solidarity Guarantee Account, and its respective profitability.
IV. That Article 97 of the Comprehensive Law of the Pension System, in its fourth paragraph, establishes that in cases where, after the twenty-year period of receiving old-age pension has ended, there is a remaining balance in the individual account, the payment of the benefit must continue from the same account until its exhaustion; otherwise, if the balance of the individual account is exhausted, the old-age pension granted will be paid for life from the Solidarity Guarantee Account.
V. That Article 119 of the Comprehensive Law of the Pension System establishes the benefits that the Solidarity Guarantee Account will finance, the components of its financing, and that the Central Reserve Bank will issue a Technical Standard for the administration and management of the Solidarity Guarantee Account.
VI. That Articles 123 and 125 of the Comprehensive Law of the Pension System establish that affiliates who access the benefit of balance refund or Temporary Economic Benefit as established in said articles will have the right to receive the refund of their contributions to the Solidarity Guarantee Account.
VII. That Article 159 of the Comprehensive Law of the Pension System establishes that the Central Reserve Bank of El Salvador will issue the necessary Technical Standards to allow the development of what is established in the aforementioned Law.

THEREFORE,

CNBCR-11/2022
NSP-44
TECHNICAL STANDARDS FOR THE ADMINISTRATION AND MANAGEMENT OF THE SOLIDARITY GUARANTEE ACCOUNT Approval: 12/30/2022 Validity: 12/30/2022

by 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 ADMINISTRATION AND MANAGEMENT OF THE SOLIDARITY GUARANTEE ACCOUNT

CHAPTER I
OBJECT, SUBJECTS, AND TERMS

Object
Art. 1.- These Standards aim to develop the provisions contained in the Comprehensive Law of the Pension System, regarding the administration and management of the Solidarity Guarantee Account by Pension Fund Administrators.

Subjects
Art. 2.- The subjects obliged to comply with 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) Affiliate: Any person who maintains a relationship with a Pension Fund Administrator through the signing of an affiliation contract; b) AFP: Pension Fund Administrator; c) Central Bank: Central Reserve Bank of El Salvador; d) CIAP: Individual Savings Account for Pensions. It is the sum of the worker's mandatory contributions and the proportion corresponding to the employer's contribution and the credited returns. Additionally, the Transfer Certificate, Supplementary Transfer Certificate, and the accumulated balance in the Social Housing Fund, where applicable, will be part of the Individual Savings Account for Pensions; e) Solidarity Guarantee Account (CGS): In accordance with Article 119 of the Comprehensive Law of the Pension System, it is the mechanism that assumes the present and future financing and payment of the Minimum Pension and the obligations corresponding to the Pension Institutes of the Public Pension System, with the objective of giving sustainability to the payment of pensions, in a stable and lifelong manner; f) CT: Transfer Certificate or its equivalent value; g) CTC: Equivalent value of the Supplementary Transfer Certificate; h) Identity Document: It may be the Unique Identity Document, Minor's ID Card, Passport, or Resident Card, as applicable;

CNBCR-11/2022
NSP-44
TECHNICAL STANDARDS FOR THE ADMINISTRATION AND MANAGEMENT OF THE SOLIDARITY GUARANTEE ACCOUNT Approval: 12/30/2022 Validity: 12/30/2022

i) DUI: Unique Identity Document; j) Employer: According to what is established in Article 7 of the Comprehensive Law of the Pension System, the employer is understood to be the boss with whom the affiliate maintains a subordinate labor relationship; k) Legal Age: The completed age that enables an affiliate to opt for a benefit or old-age pension, according to what is established in Article 96 of the Pension System Law; l) Work History: The individual work history of the affiliate; m) IBC: Contribution base income, in accordance with what is provided in Article 14 of the Comprehensive Law of the Pension System; n) INPEP: National Institute of Pensions for Public Employees, which was dissolved by Legislative Decree No. 615, dated December 20, 2022, published in the Official Journal No. 241, Volume No. 437 of December 21, 2022; o) CPI: Consumer Price Index, published by the National Office of Statistics and Censuses; p) ISP: Salvadoran Institute of Pensions; q) ISSS: Salvadoran Social Security Institute; r) SP Law: Comprehensive Law of the Pension System; s) INPEP Number: Number granted by the National Institute of Pensions for Public Employees to its affiliates, prior to the entry into force of the Law Creating the Salvadoran Institute of Pensions; t) Pensioner: Person who is receiving a pension from the Pension System, either as the cause or as a beneficiary in accordance with the Comprehensive Law of the Pension System; u) Minimum Pension: The minimum amount to be granted in cases of old age, disability, and survivorship in accordance with Article 114 of the Comprehensive Law of the Pension System; v) SP: Pension System; w) SAP: Pension Savings System according to what is established in the Pension Savings System Law repealed by Legislative Decree No. 614, dated December 20, 2022, published in the Official Journal No. 241, Volume No. 437 of December 21, 2022; x) SPP: Public Pension System; and y) Superintendence: Superintendence of the Financial System.

CHAPTER II
OF THE SOLIDARITY GUARANTEE ACCOUNT

Contributions to the Solidarity Guarantee Account Art. 4.- In accordance with Article 119 of the SP Law, the Solidarity Guarantee Account is constituted with the following contributions:

CNBCR-11/2022
NSP-44
TECHNICAL STANDARDS FOR THE ADMINISTRATION AND MANAGEMENT OF THE SOLIDARITY GUARANTEE ACCOUNT Approval: 12/30/2022 Validity: 12/30/2022

a) The contribution borne by the employer established in letter b) of Article 16 of the SP Law; and b) The special contribution on the amount of the monthly pension of the affiliates pensioned for old age referred to in Article 121 of the SP Law, which will be 7% if the amount of the monthly pension is greater than 6 times the minimum pension. The Solidarity Guarantee Account and its respective profitability will be part of the equity of the Pension Fund and will be expressed in shares of said Fund. In accordance with Articles 7 and 15 of the SP Law, independent workers will be responsible for the payment of the total of the contributions referred to in Article 16 of the same Law.

Credits to the Solidarity Guarantee Account
Art. 5.- It is the responsibility of the AFPs to credit to the Solidarity Guarantee Account the contributions referred to in Article 4 of these Standards.
Such credit must be made within a period not exceeding thirty days counted from the day following the expiration of the period established to make payments of contributions to the SP.
Notwithstanding the foregoing, for the case of the special contributions referred to in Article 121 of the SP Law, the credit to the Solidarity Guarantee Account will be made on the day the pension is paid to the corresponding pensioned affiliates. The contributions will be expressed in shares on the date they are credited to the Pension Fund and will accrue the profitability of said Fund in accordance with what is established in the fund valuation regulations.

Financing of benefits borne by the Solidarity Guarantee Account Art. 6.- The Solidarity Guarantee Account will be administered by the AFPs and will be used exclusively to finance the following obligations:
a) Payment of pensions in any modality contemplated in the SP Law upon exhaustion of the Individual Savings Account for Pensions and having completed the payment of the CT or its equivalent value, where applicable; (3) b) Payment of a value equivalent to the Transfer Certificates for all affiliates in accordance with Articles 119 and 147 of the SP Law for the financing of the payments of the benefits contemplated in said Law when applicable. For the case of affiliates obliged to the SAP with the right to balance refund, the

CNBCR-11/2022
NSP-44
TECHNICAL STANDARDS FOR THE ADMINISTRATION AND MANAGEMENT OF THE SOLIDARITY GUARANTEE ACCOUNT Approval: 12/30/2022 Validity: 12/30/2022

payment of the CT will be made in a single amount. (3) In the cases of affiliates obliged to the SAP, who meet the requirements to retire for old age, disability, or generate the right to survivorship pension, the payment of the CT or its equivalent value will be made through monthly installments for the amount of the pension in force, starting from when the balance of the CIAP has been exhausted. (3) In the event of the death of the affiliate before the payment of the CT or its equivalent value has been completed, without there being beneficiaries with the right to survivorship pension, the remaining balance will become part of the estate, updating this by the variation of the CPI in accordance with what is established in the second paragraph of Article 147 of the SP Law; (3) c) Refunds of contributions to affiliates who do not meet the requirements to access any other benefit covered with resources from the Solidarity Guarantee Account; d) An increase of ten percent (10%) of the amount of the pension in payment of the pensioned affiliates referred to in Article 121 of the SP Law, as consideration for said contribution, which will be effective from the date the pensioned affiliate reaches eighty-five years of age, in accordance with what is provided in said article; and e) Other benefits and benefits established by the SP Law charged to the CGS.

Internal Control
Art. 7.- For the control of income and expenses of the CGS, the AFPs must have policies, procedures, and an internal control structure for processes related to records of operations or transactions, with the objective of implementing mechanisms that allow them to minimize errors and mitigate risks of a legal, operational, and financial nature. Each AFP must group by the type of benefit indicated in Article 119 of the SP Law, the payment of benefits charged to the CGS, and must prepare separate spreadsheets attending to each of the benefits or benefits that the CGS finances. Likewise, the AFPs must implement the necessary controls to verify the survival of the pensioners, in order to make pension disbursements with resources coming from the CGS effectively. Notwithstanding what is established in the "Technical Standards for the Granting of Old Age Benefits in the System of -43), the proof of survival must be carried out at least semi-annually through mechanisms that allow proving that the affiliated or pensioned beneficiary is alive.

CNBCR-11/2022
NSP-44
TECHNICAL STANDARDS FOR THE ADMINISTRATION AND MANAGEMENT OF THE SOLIDARITY GUARANTEE ACCOUNT Approval: 12/30/2022 Validity: 12/30/2022

Information Backing
Art. 8.- The records of the movements of the operations that are carried out will constitute the documentary backing of each of the transactions that are carried out in the CGS and of the accounting records, accounts, and sub-accounts of the equity of the Pension Fund, the AFPs being obliged to maintain them in electronic or physical media that allow their rapid location.

CHAPTER III
OF THE LIQUIDITY MANAGEMENT OF THE SOLIDARITY GUARANTEE ACCOUNT

Art. 9.- The AFPs must identify all affiliates who will have the right to coverage of some benefit charged to the CGS with the objective of maintaining adequate management of its liquidity. For these purposes, with sixty (60) days of advance notice before the payment of said benefits, they must identify and quantify the monthly resources necessary for the CGS to cover the cases established in the letters of Article 6 of these Standards. The AFP will calculate the total of the resources corresponding to the payment of the commitments charged to the CGS and will carry out the necessary management to execute the payments in a timely manner.

Refund of contributions to the Solidarity Guarantee Account Art. 10.- To carry out the calculation of the refund of contributions to the CGS, the process established in Article 31 of -43), approved by the Central Bank through its Standards Committee, must be followed. The amount will be the balance corresponding to the last day of the month prior to when the age requirement is met. However, if the affiliate presented the application after meeting the requirements, the balance to be taken into account will be that of the last day of the month prior to when said application was presented.

CHAPTER IV
REQUIREMENTS OF RESOURCES FROM THE STATE
Art. 11.- If the Solidarity Guarantee Account is insufficient to cover its pension obligations, they will have the payment guarantee of the ISP; in case such participation proves insufficient, it will correspond to the State to contribute, in accordance with Article 50 of the Constitution of the Republic. For this, the AFPs will present the request for funds corresponding to the ISP for the payment of all benefits to be paid in the following month. For this, they must present

CNBCR-11/2022
NSP-44
TECHNICAL STANDARDS FOR THE ADMINISTRATION AND MANAGEMENT OF THE SOLIDARITY GUARANTEE ACCOUNT Approval: 12/30/2022 Validity: 12/30/2022

a consolidated total amount required that must reflect the changes generated by the granting of new pensions, expiration, redistribution, suspension, or any change in the amount of the benefits granted, as well as a detail of the payment scheduling dates of these.

CHAPTER V
REGISTERS OF THE SOLIDARITY GUARANTEE ACCOUNT

Mechanized Account System of the Solidarity Guarantee Account and Register Art. 12.- For the purposes of adequate control of the income and expenses of the Solidarity Guarantee Account, the AFPs must keep an updated record of the contributions received from employers and the special contribution of the pensioners, as well as the payment of each of the benefits that are financed charged to the CGS. The AFPs must adapt their computer systems so that they allow clearly identifying the following minimum content:
a) For the case of income to the CGS:
i. DUI or identity document of the affiliate or pensioner;
ii. Name of the affiliate or pensioner;
iii. IBC or pension amount in the case of special contributions of the pensioners;
iv. Nominal value of the contribution, which will correspond to the percentage borne by the employer as established in letter a) of Article 4 of these Standards;
v. Nominal value of the contribution corresponding to the special contributions on the amount of the monthly pension of the affiliated pensioners referred to in letter b) of Article 4 of these Standards;
vi. Period of accrual of the contribution to the CGS;
vii. Spreadsheet number to which the contribution corresponds;
viii. Payment date;
ix. Registration date; and
x. Number of Shares corresponding to the CGS.
b) For the case of expenses from the CGS detailed by:
i. Name of the beneficiary or pensioner;
ii. DUI or identity document of the cause or pensioner;
iii. Benefits that the CGS must pay according to Article 7 of these Standards;
iv. Payment date of the benefit;
v. Period of accrual corresponding to the payment of the benefit; and
vi. Amount of the benefit paid.

CNBCR-11/2022
NSP-44
TECHNICAL STANDARDS FOR THE ADMINISTRATION AND MANAGEMENT OF THE SOLIDARITY GUARANTEE ACCOUNT Approval: 12/30/2022 Validity: 12/30/2022

This information must coincide with the corresponding accounting records of the CGS.
Art. 13.- The codes of the operations that imply movements or transactions that must be reflected in the Statements of Individual Savings Accounts for Pensions, will be assigned codes in accordance with what is established in Annex No. 2 of these Standards.

Information Requirements
Art. 14.- The AFPs must establish a report of the monthly movements at nominal values where the initial balance, income by type of contribution, expenses by type of benefit, and final balance of the CGS are reflected, which must be reported to the Superintendence within the first ten (10) business days of the month following the one being reported. The Superintendence will send to the AFPs, with a copy to the Central Bank, the technical details related to the sending of said information, which will be communicated within a maximum period of thirty (30) business days following the entry into force of these Standards. The technical details will be limited to the collection of information in accordance with what is regulated in Annex No. 1 of these Standards. The AFPs must implement the necessary mechanisms for the submission of the information within a maximum period of thirty (30) days, counted from the date of having received the note from the Superintendence referred to in the second paragraph of this article.

CHAPTER VI
TRANSFER CERTIFICATES AND SUPPLEMENTARY TRANSFER CERTIFICATES

Payment of Transfer Certificates charged to the Solidarity Guarantee Account Art. 15.- The payment of the amount equivalent to the CTs will be charged to the CGS, which will be credited to their CIAP. The calculation of the CTs will be carried out by the AFP in accordance with what is established in Article 148 of the SP Law, for which the AFPs will follow the following procedure:
a) When affiliates request the AFPs for the payment of a benefit that requires a Transfer Certificate as a source of financing, the AFPs must inform them that it is an indispensable requirement to carry out the process of reconstruction of the Work History when they have contributed in the SPP, since it is the basis for the calculation of these benefits; b) The AFPs must inform the Superintendence of the payment requests for the amount equivalent to the CT, reporting the detailed information in Annex No. 3 of these Standards;

CNBCR-11/2022
NSP-44
TECHNICAL STANDARDS FOR THE ADMINISTRATION AND MANAGEMENT OF THE SOLIDARITY GUARANTEE ACCOUNT Approval: 12/30/2022 Validity: 12/30/2022

c) The Superintendence will confirm the consistency of the information within a period of 3 business days, counted from the date on which the information is received; d) Once the information is verified, the Superintendence will communicate to the AFPs about the records that have passed the validations and those that present inconsistencies. The AFPs will pay only the amounts equivalent to the CT for the records that have passed the validations and will proceed in accordance with the -48); and e) At the end of the month, the AFPs must send to the Superintendence and to the corresponding Pension Institute the information of the amounts equivalent to the CTs and CTCs that have been recognized charged to the CGS.

Payment of Supplementary Transfer Certificates charged to the Solidarity Guarantee Account Art. 16.- When the affiliate has the right to the payment of a CTC, according to what is provided in -48), the payment of the amount equivalent to the CTCs will be charged to the CGS. The AFP must send to the Superintendence information of the amounts equivalent to CTCs that have been recognized and/or paid charged to the CGS, in accordance with the information detailed in Annex No. 3 of these Standards.

CHAPTER VII
OTHER PROVISIONS AND VALIDITY

Transfers between Pension Fund Administrators
Art. 17.- When the transfer of an affiliate from one AFP to another is appropriate, the originating AFP will transfer to the destination AFP all the historical information of the contributions made in the name of the affiliate to the CGS, considering the provisions contained in letter a) of Article 12 of these Standards. When it concerns affiliates who made transfers during their work history, the calculation of the refunds to the CGS that are regulated in these Standards, must take into account the data on the average monthly share value of the Pension Fund of the AFP in which they are affiliated at the moment of carrying out said calculation.

Transitory
Art. 18.- The AFPs will have a period of 90 days to make the corresponding adjustments related to the substitution of the Unique Pension Number by the Unique Identity Document Number in the Systems, forms, or others in the

CNBCR-11/2022
NSP-44
TECHNICAL STANDARDS FOR THE ADMINISTRATION AND MANAGEMENT OF THE SOLIDARITY GUARANTEE ACCOUNT Approval: 12/30/2022 Validity: 12/30/2022