Technical Standards for the Administration of Current Accounts of the Pension Institutes of the Public Pension System

CNBCR-01/2023
NSP-78
TECHNICAL STANDARDS FOR THE ADMINISTRATION OF CURRENT ACCOUNTS OF THE PENSION INSTITUTES OF THE PUBLIC PENSION SYSTEM Approval: 26/01/2023 Effective: 26/01/2023 Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv

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

WHEREAS:
I. That by Legislative Decree No. 614, dated 20 December 2022 and published in the Official Gazette No. 241, Volume No. 437 of 21 December 2022, the Comprehensive Pension System Law was approved.
II. That Article 149 of the Comprehensive Pension System Law establishes that the Public System, which includes the Pension Unit of the Salvadoran Social Security Institute and the Salvadoran Pension Institute, must provide benefits in accordance with this Law and their own creation Laws.
III. That Article 159 of the Comprehensive Pension System Law establishes that the Central Reserve Bank of El Salvador shall issue the necessary Technical Standards to enable the development of the provisions of said Law.
IV. That in order to maximize the return on contributions, the period during which they are deposited in current accounts of financial entities must be reduced to a minimum, since these offer little or no monetary remuneration on deposits. Likewise, it must be considered that the Pension Institutes of the Public Pension System must maintain a certain degree of liquidity to meet the payment of pensions and other benefits, their operating expenses and the management of their investments.
V. That there must be defined criteria for the administration of the current accounts of financial entities held by the Pension Institutes, in order to regulate excessive balances in them.

THEREFORE, by virtue of the normative 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 OF CURRENT ACCOUNTS OF THE PENSION INSTITUTES OF THE PUBLIC PENSION SYSTEM

CHAPTER I
PURPOSE, SUBJECTS AND TERMS

CNBCR-01/2023
NSP-78
TECHNICAL STANDARDS FOR THE ADMINISTRATION OF CURRENT ACCOUNTS OF THE PENSION INSTITUTES OF THE PUBLIC PENSION SYSTEM Approval: 26/01/2023 Effective: 26/01/2023 Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv

Purpose
Art. 1.- The purpose of these Standards is to establish the procedures that the Salvadoran Pension Institute and the Salvadoran Social Security Institute must follow for the management of current accounts.

Subjects
Art. 2.- The subjects obligated to comply with the provisions established in these Standards are:
a) The Salvadoran Pension Institute; and b) the Salvadoran Social Security Institute.
Everything related to the Salvadoran Social Security Institute in these Standards is applicable only with respect to the invalidity, old age and death regime administered by the Pension Unit of the Salvadoran Social Security Institute.

Terms
Art. 3.- For purposes of these Standards, the terms indicated below have the following meaning:
a) Financial Entities: Those financial entities supervised by the Superintendency of the Financial System and that are legally empowered by their specific Laws to carry out operations with current accounts, that operate within the country and that are duly registered in the Public Registry of the Superintendency, in accordance with the provisions of the Law on Supervision and Regulation of the Financial System; b) Pension institutes: Refers to the Salvadoran Pension Institute or the Salvadoran Social Security Institute; c) ISP: Salvadoran Pension Institute; d) ISSS: Salvadoran Social Security Institute; and e) Superintendency: Superintendency of the Financial System.

CHAPTER II
ON THE USE OF CURRENT ACCOUNTS

Art. 4.- Every bank account shall be opened in financial entities supervised by the Superintendency, and shall be exclusively in the name of the corresponding Pension Institute; regional or departmental offices shall open their accounts followed by their specific denomination.

The number of accounts shall be limited to the strictly necessary.

Art. 5.- The Pension Institutes must administer different bank current accounts, in accordance with the following operations:

CNBCR-01/2023
NSP-78
TECHNICAL STANDARDS FOR THE ADMINISTRATION OF CURRENT ACCOUNTS OF THE PENSION INSTITUTES OF THE PUBLIC PENSION SYSTEM Approval: 26/01/2023 Effective: 26/01/2023 Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv

a) Collection of contributions and bank returns; b) Receipt of government funds or contributions; c) Payment of benefits to pensioners and beneficiaries; d) Payment of salaries and other remuneration to personnel; e) Payment of operating expenses and other institutional expenditures; f) Management of own investments; and g) Management of investments in securities.

Art. 6.- The Pension Institutes shall under no circumstances mix the different resources to which each account is destined in accordance with the concepts or operations referred to in Article 5 of these Standards. The ISSS Invalidity, Old Age and Death regime shall manage its accounts separately from the Health regime of said Institute.

Collection accounts
Art. 7.- The collection accounts of the Pension Institutes shall be used to collect labor contributions and employer contributions, fines and other related income; also to receive other income, including government contributions. Art. 8.- The collection accounts shall be destined exclusively to the capture of resources and shall be drawn down only through transfers to other bank accounts. Art. 9.- The Pension Institutes must control daily the income and other charges and credits applied to their accounts. The funds in said accounts must not be maintained more than three business days after being deposited, and must be invested or transferred to a payment account for their prompt disposition. Art. 10.- Excepted from the term defined in Article 9 of these Standards are current accounts that include the accrual of interest in their contract, provided that the conditions to be met by the Pension Institute do not affect the liquidity necessary to meet the payment of operating expenses, management of investments and the payment of pensions and benefits.

Benefit payment accounts
Art. 11.- The benefit payment accounts shall be used for the payment of pensions and other monetary benefits to pensioners or beneficiaries.
The account shall be funded through transfers from collection accounts or by liquidation of investments.
Art. 12.- The amount of the benefit accounts shall be reduced by payments for pensions and benefits to members and their beneficiaries.

CNBCR-01/2023
NSP-78
TECHNICAL STANDARDS FOR THE ADMINISTRATION OF CURRENT ACCOUNTS OF THE PENSION INSTITUTES OF THE PUBLIC PENSION SYSTEM Approval: 26/01/2023 Effective: 26/01/2023 Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv

Art. 13.- Charges to this type of account shall be made on the basis of the payment schedule for the corresponding month and reprogramming thereof, with an anticipation of no more than five business days.

Operating payment accounts
Art. 14.- The operating payment accounts shall comprise those bank accounts destined to the payment of administrative expenses, including the payment of remuneration to personnel, financial expenses, acquisition of supplies, use assets, depreciable administrative assets, non-depreciable assets, investments in projects and programs, payment of current debt and financing of third parties that do not correspond to the payment of pensions and benefits to members. Art. 15.- The operating payment accounts shall be funded through transfers from collection accounts or by liquidation of investments. Art. 16.- The amount of said accounts shall be reduced by payment through checks or other authorized means, for the concepts mentioned in Article 13 of these Standards. Art. 17.- Charges to said accounts shall be made on the basis of the payment schedule for the corresponding month, with an anticipation of no more than five business days.

Investment account
Art. 18.- In the own investment accounts, the Pension Institutes shall receive the collection of securities representing financial investments, for their investment in different instruments, immediately or for a period of less than ten calendar days, of known investment opportunities, if circumstances so warrant. In the securities investment accounts, the ISP shall administer the resources from the issuances of securities, Transition Financing Certificate and Pension Obligation Certificates.

Financial programming
Art. 19.- The Pension Institutes must present to the Superintendency the following documents: (1) a) Reports with balances at the close of each reported month within ten business days of the following month: (1)
i. Budgetary Credit Control Report; (1)
ii. Report of Available Funds by type of account (savings, current, term deposit); and (1)
iii. Report of Available Funds of securities issued by the ISP. (1)
b) Reports with budgetary balances within ten business days of the month corresponding to their execution: (1)

CNBCR-01/2023
NSP-78
TECHNICAL STANDARDS FOR THE ADMINISTRATION OF CURRENT ACCOUNTS OF THE PENSION INSTITUTES OF THE PUBLIC PENSION SYSTEM Approval: 26/01/2023 Effective: 26/01/2023 Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv

i. Monthly Cash Flow Budget, with weekly detail, in accordance with the format established in Annex No. 1 of these Standards. (1)
The initial balance of the Cash Flow Budget shall be the sum of the balances in the current accounts projected for the end of the previous month.

Art. 20.- The Pension Institutes must maintain at all times an updated Cash Flow Budget, as well as the reports referred to in Article 19 of these Standards, which must be sent to the Superintendency. (1)

Control of current accounts
Art. 21.- The Pension Institutes must control daily the availability maintained in all current accounts; in the case of accounts collecting contributions and worker and employer contributions, they must obtain details of the daily movements from the corresponding financial entities; in addition, for each current account they shall prepare a monthly reconciliation indicating the previous balance, charges and credits to the account and final balance. From the daily balances, they shall prepare a bank availability table; said balances shall be reported to the Superintendency through the daily investment report.

CHAPTER III
OTHER PROVISIONS AND EFFECTIVENESS

Sanctions
Art. 22.- Non-compliance with the provisions contained in these Standards shall be sanctioned in accordance with the provisions of the Law on Supervision and Regulation of the Financial System.

Repeal
Art. 23.- These Standards repeal the "Instructions for the Management of Current Accounts for the Institutions of the Public Pension System" (SPP-0004/98), approved on 28 May 1998 by the Pension Superintendency, whose Organic Law was repealed by Legislative Decree No. 592 containing the Law on Supervision and Regulation of the Financial System, published in the Official Gazette No. 23, Volume No. 390, dated 2 February 2011.

Matters not provided for
Art. 24.- Matters not provided for in the regulation of these Standards shall be resolved by the Central Reserve Bank of El Salvador through its Standards Committee.

CNBCR-01/2023
NSP-78
TECHNICAL STANDARDS FOR THE ADMINISTRATION OF CURRENT ACCOUNTS OF THE PENSION INSTITUTES OF THE PUBLIC PENSION SYSTEM Approval: 26/01/2023 Effective: 26/01/2023 Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv

Effectiveness
Art. 25.- These Standards shall enter into force as of 26 January 2023.

AMENDMENTS:
(1) Amendments to Articles 19 and 20, approved by the Central Bank through its Standards Committee, in Session No. CN-07/2026, of 20 October 2026, effective as of 4 November 2026.

CNBCR-01/2023
NSP-78
TECHNICAL STANDARDS FOR THE ADMINISTRATION OF CURRENT ACCOUNTS OF THE PENSION INSTITUTES Approval: 26/01/2023 Effective: 26/01/2023 Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv

Annex No. 1
Cash Flow Budget for the month of ______
1st Week 2nd Week 3rd Week 4th Week 5th Week Total INCOME Contributions and labor contributions Other collections Redemption of securities Placement of securities Collection of interest Collection of coupons Transfers from other institutions Sum of income EXPENSES Benefits Operating expenses (detail in accordance with Article 14 of these Standards) Investments (purchase of securities) Payment of returns on securities Transfers to other institutions Sum of expenses Income less weekly expenses Initial availability in current accounts Final availability in current accounts