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: 01/26/2023 Validity: 01/26/2023

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, and 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 149 of the Comprehensive Law of the Pension System establishes that the Public System, which includes the Pension Unit of the Salvadoran Institute of Social Security and the Salvadoran Institute of Pensions, must provide benefits in accordance with this Law and its own creation Laws.
III. That Article 159 of the Comprehensive Law of the Pension System establishes that the Central Bank of Reserve of El Salvador will issue the necessary Technical Standards that allow the development of what is established in the aforementioned Law.
IV. That in order to maximize the yield of contributions, the period in which they are deposited in current accounts of financial entities must be reduced to a minimum, as these entities offer little or no monetary return on deposits. Likewise, it must be considered that the Pension Institutes of the Public Pension System must maintain a certain degree of liquidity to face the payment of pensions and other benefits, their operating expenses, and the management of their investments.
V. That defined criteria must be available for the administration of current accounts of financial entities held by the Pension Institutes, in order to regulate excessive balances in them.

THEREFORE, in virtue of the regulatory powers conferred by Article 99 of the Law of 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
OBJECTIVE, 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: 01/26/2023 Validity: 01/26/2023

Objective
Art. 1.- These Standards aim to establish the procedures that the Salvadoran Institute of Pensions and the Salvadoran Institute of Social Security must follow for the management of current accounts.

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

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) Financial Entities: These are financial entities supervised by the Financial System Superintendence and that are legally authorized 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 Superintendence, in accordance with what is established in the Law of Supervision and Regulation of the Financial System; b) Pension Institutes: Refers to the Salvadoran Institute of Pensions or the Salvadoran Institute of Social Security; c) ISP: Salvadoran Institute of Pensions; d) ISSS: Salvadoran Institute of Social Security; and e) Superintendence: Financial System Superintendence.

CHAPTER II
ON THE USE OF CURRENT ACCOUNTS

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

The number of accounts will be limited to what is strictly necessary.

Art. 5.- The Pension Institutes must administer different bank current accounts, according to 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: 01/26/2023 Validity: 01/26/2023

a) Collection of contributions and bank yields; b) Receipt of funds or government 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 disbursements; f) Management of own investments; and g) Management of investments in securities

Art. 6.- The Pension Institutes must 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 Disability, Old Age, and Death regime of the ISSS will manage its accounts separately from the Health regime of said Institute.

Revenue Collection Accounts
Art. 7.- The revenue collection accounts of the Pension Institutes will 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 revenue collection accounts will be exclusively destined for the capture of resources and will be discharged 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 kept for more than three business days after being deposited, and must be invested or transferred to a paying account for prompt availability.

Art. 10.- The deadline defined in Article 9 of these Standards is excepted for current accounts that in their contract include the accrual of interest, provided that the conditions to be met by the Pension Institute do not affect the necessary liquidity to face the payment of operating expenses, management of investments, and the payment of pensions and benefits.

Benefit Payment Accounts
Art. 11.- Benefit payment accounts will be used for the payment of pensions and other monetary benefits to pensioners or beneficiaries.
The account will be funded through transfers from revenue collection accounts or through the liquidation of investments.

Art. 12.- The amount of the benefit accounts will be reduced by payments for pensions and benefits to affiliates and beneficiaries thereof.

CNBCR-01/2023
NSP-78
TECHNICAL STANDARDS FOR THE ADMINISTRATION OF CURRENT ACCOUNTS OF THE PENSION INSTITUTES OF THE PUBLIC PENSION SYSTEM Approval: 01/26/2023 Validity: 01/26/2023

Art. 13.- Charges to this type of account will be made based on the payment schedule of the corresponding month and rescheduling thereof, with an advance of no more than five business days.

Operational Payment Accounts
Art. 14.- Operational payment accounts will comprise those bank accounts destined for the payment of administrative expenses, including the payment of remuneration to personnel, financial expenses, acquisition of inventory, assets for use, 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 affiliates.

Art. 15.- Operational payment accounts will be funded through transfers from revenue collection accounts or through the liquidation of investments.

Art. 16.- The amount of said accounts will 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 will be made based on the payment schedule of the corresponding month, with an advance of no more than five business days.

Investment Account
Art. 18.- In own investment accounts, the Pension Institutes will receive the collection of titles representing financial investments, for investment in different instruments, immediately or for a period of less than ten calendar days, from known investment opportunities, if circumstances warrant it. In accounts for investments in securities, the ISP will manage resources coming from the issuance of securities, Transition Financing Certificates, and Pension Obligation Certificates.

On Financial Programming
Art. 19.- The Pension Institutes must present to the Superintendence within the ten days prior to the start of the month corresponding to its execution, the following documents:
a) Credit Budget Control Report; b) Monthly Cash Flow Budget, with weekly detail, according to the format established in Annex No. 1 of these Standards; c) Availability Report by type of account (savings, current, time deposit); and d) Availability Report of securities issued by the ISP. The initial balance of the Cash Flow Budget will be the sum of the balances in the

CNBCR-01/2023
NSP-78
TECHNICAL STANDARDS FOR THE ADMINISTRATION OF CURRENT ACCOUNTS OF THE PENSION INSTITUTES OF THE PUBLIC PENSION SYSTEM Approval: 01/26/2023 Validity: 01/26/2023

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 may be requested by the Superintendence.

On the control of current accounts
Art. 21.- The Pension Institutes must control daily the availability they maintain in all current accounts; in the case of revenue collection accounts for contributions and worker and employer contributions, they must obtain detail of the daily movements of the corresponding financial entities, in addition, for each current account they will prepare a monthly reconciliation indicating the previous balance, charges and credits to the account, and final balance. From the daily balances, they will prepare a bank availability table; said balances will be reported to the Superintendence through the daily investment report.

CHAPTER III
OTHER PROVISIONS AND VALIDITY

Sanctions
Art. 22.- 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. 23.- These Standards repeal the
-0004/98), approved on May 28, 1998, by the Pension Superintendence, whose Organic Law was repealed by Legislative Decree No. 592 which contains the Law of Supervision and Regulation of the Financial System, published in the Official Journal No. 23, Volume No. 390, dated February 2, 2011.

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

Validity
Art. 25.- These Standards will enter into force from the twenty-sixth of January of two thousand twenty-three.

CNBCR-01/2023
NSP-78
TECHNICAL STANDARDS FOR THE ADMINISTRATION OF CURRENT ACCOUNTS OF THE PENSION INSTITUTES Approval: 01/26/2023 Validity: 01/26/2023

Annex No. 1
Cash Flow Budget for the month of ________________ 1st Week 2nd Week 3rd Week 4th Week 5th Week Total INCOME Labor contributions and payments Other charges Redemption of titles Placement of securities Interest collection Coupon collection Transfers from other institutions Total Income EXPENSES Benefits Operating expenses (detail according to
Article 14 of these Standards)
Investments (purchase of titles)
Payment of yields of securities
Transfers to other institutions
Total Expenses
Weekly Income minus Expenses
Initial availability in current accounts
Final availability in current accounts