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 current accounts in financial entities held by the Pension Institutes, in order to regulate excessive balances therein.

THEREFORE,

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 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 disability, 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 Superintendence 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 Superintendence, 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) Superintendence: Superintendence 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 Superintendence, and shall be exclusively in the name of the corresponding Pension Institute; regional or departmental offices shall open their accounts followed by their specific designation.

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 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 expenditures;

f) Management of own investments; and

g) Management of investments in securities.

Art. 6.- The Pension Institutes shall under no circumstances commingle 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 Disability, 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 collection 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 held for more than three business days after being deposited, and must be invested or transferred to a payment account for prompt disposition.

Art. 10.- Exempted 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 affiliates 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 for the payment of administrative expenses, including the payment of personnel remuneration, financial expenses, acquisition of supplies, 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.- 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 Superintendence 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 at all times maintain an updated Cash Flow Budget, as well as the reports referred to in Article 19 of these Standards, which must be sent to the Superintendence. (1)

Control of current accounts

Art. 21.- The Pension Institutes must control daily the availability they maintain in all current accounts; in the case of accounts collecting contributions and contributions from workers and employers, 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 Superintendence 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 Superintendence, 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.

Unforeseen aspects

Art. 24.- Aspects not provided for in matters of regulation in 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 the twenty-sixth day of January two thousand twenty-three.

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 two thousand twenty-six, effective as of 4 November two thousand twenty-six.

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