Technical Standards for the Collection and Accreditation of Contributions to the Public Pension System

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TECHNICAL STANDARDS FOR THE COLLECTION AND ACCREDITATION OF CONTRIBUTIONS TO THE PUBLIC PENSION SYSTEM

Approval: 12/30/2022 Validity: 12/30/2022

THE COMMITTEE OF NORMS 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 Pension System Law was approved.

II. That Article 1 of the Comprehensive Pension System Law establishes that the pension system is created for workers in the private, public, and municipal sectors, which shall be subject to the regulation, coordination, and management of the State, in accordance with the provisions of said Law.

III. That Article 16 of the Comprehensive Pension System Law establishes that employers and workers shall contribute to the payment of contributions within the Pension System in the proportions established in the referenced Law.

IV. That in accordance with Article 21 of the Comprehensive Pension System Law, contributions shall be declared and paid by the employer, the independent worker, or the entity paying disability subsidies for illness, as applicable.

V. That Article 159 of the Comprehensive Pension System Law establishes that the Central Reserve Bank of El Salvador shall issue the Technical Standards necessary to allow the development of what is established in the referenced Law.

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 COLLECTION AND ACCREDITATION OF CONTRIBUTIONS TO THE PUBLIC PENSION SYSTEM

CHAPTER I OBJECT, SUBJECTS, AND TERMS

Object Art. 1.- The object of these Standards is to facilitate and ensure the application of the provisions of the Comprehensive Pension System Law, which regulate the collection of contributions from workers and employer contributions to the Public Pension System, as well as to establish the procedure for their accreditation, as part of the update of each affiliate's work history.

Subjects Art. 2.- The subjects obligated to comply with the provisions established in these Standards are the Salvadoran Social Security Institute (ISSS) and the Salvadoran Pension Institute (ISP).

Terms Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning: a) Accreditation: Process by which the Pension Institute carries out the correct proportional assignment of contributions made to its affiliates in their work history; b) Pension Payroll Administrator: Person designated by the employer to manage and update employee information and create work centers in the Pension Payroll Preparation System; c) Affiliate: Any person who is insured in one of the disability, old-age, and death programs administered by the Salvadoran Social Security Institute or the Salvadoran Pension Institute; d) AFP: Pension Fund Administrators; e) Central Bank: Central Reserve Bank of El Salvador; f) Pension contributions: Employer contributions and employee contributions; g) Voluntary contributor: Affiliate who continues to contribute to the Salvadoran Social Security Institute or the Salvadoran Pension Institute, assuming full responsibility for pension contributions, in order to complete the minimum contribution time required to obtain a pension in the Public Pension System; h) Days: When used for a period, it shall be understood that it refers to calendar days; i) Identity document: May be the Unique Identity Document, Minor's Card, Passport, or Resident's Card, as applicable; j) DUI: Unique Identity Document; k) Pension Payroll Manager: Person designated by the employer to maintain employee information, prepare, and send contribution payrolls; l) IBC: Contribution Base Income; m) Pension Institute: Shall refer to the Salvadoran Social Security Institute and the Salvadoran Pension Institute; n) ISP: Salvadoran Pension Institute; o) ISSS: Salvadoran Social Security Institute; p) Supervision Law: Law on Supervision and Regulation of the Financial System; q) SP Law: Comprehensive Pension System Law; r) Contribution Payment Payroll: Declaration form of contributions presented by employers; s) Summary Payroll: Document used to declare contributions by employers who submit pension payrolls in magnetic or electronic media; t) Arrears: Pension contributions of workers, paid to a pension institution different from the one to which they are affiliated, in the period corresponding to the contribution; u) SP: Pension System; v) Repealed. (2) w) SPP: Public Pension System; and x) Superintendent: Superintendent of the Financial System.

CHAPTER II COLLECTION OF CONTRIBUTIONS TO THE PUBLIC PENSION SYSTEM

Of Contributions Art. 4.- While there is a labor dependency relationship, workers and their employers must make mandatory monthly contributions to the SPP, in accordance with what is established in Article 6 of these Standards.

Art. 5.- The obligation to contribute shall cease when the affiliate retires for old age or receives the old-age benefit, in accordance with what is established in Article 13 of the SP Law.

Art. 6.- The contribution rate for those who remain affiliated with the ISSS or the ISP shall be sixteen percent (16%) and distributed, in accordance with the proportions established in Article 16 of the SP Law.

Of the Collection Service Art. 7.- The operational procedure for the collection of mandatory and voluntary pension contributions of affiliates to the SPP shall be carried out through financial institutions supervised by the Superintendent that are authorized by Law to carry out operations with checking accounts, operate within the country, and are duly registered in the Public Registry of the Superintendent, in accordance with what is established in the Supervision Law.

Collection Service Contract Art. 8.- The pension institutes must sign a collection contract with the financial institutions referred to in the previous article. Prior to its signing, they must send the draft contract to the Superintendent, for the purpose that it approves or proposes modifications to it, for which it shall have a period of three business days, from the date of its receipt. Subsequently, the ISSS or the ISP shall proceed to sign said contract by public deed, sending a copy to the Superintendent within three business days following the signing.

In the event that the definitive contract does not coincide with the one previously approved by the Superintendent, this, following the procedure established in the Supervision Law, shall apply the corresponding legal sanction.

Content of the Contract Art. 9.- The collection service contract must specify the conditions and deadlines for its execution and must contain, at a minimum, the following clauses: a) The services that financial institutions are obligated to provide to the pension institute, as well as the remuneration to be paid for them; b) The obligation on the part of financial institutions to pay the collected amount only into the account opened specifically for these purposes; c) The obligation on the part of financial institutions to open checking and savings accounts respectively in accordance with the "Accounting System for the Public Pension System"; d) The indication that the resources collected by financial institutions must be available to the pension institutes no later than the day following the collection, regardless of which agency, branch, or office of the collecting institution the payments were made in; e) The indication that the cost incurred for the execution of the obligations corresponding to the contract shall be the exclusive responsibility of the pension institutes; f) The obligation of financial institutions not to require any additional information to the payment receipt referred to in Article 21 of these Standards, as proof of deposit made by the employer, voluntary SPP contributor, or independent worker; and g) The obligation on the part of financial institutions to send Contribution Payment Payrolls and Summary Payrolls to the offices designated by the Pension Institutes within a period not exceeding three business days after the collection is made.

Contribution Base Income of Dependent Workers Art. 10.- The IBC of dependent workers shall be that indicated in Article 14 of the SP Law.

Art. 11.- Workers who have two or more jobs must contribute to the SPP for each of the jobs in question, applying the contribution rate, in accordance with what is indicated in Article 16 of the SP Law.

Contribution Payroll Art. 12.- All employers or entities paying disability subsidies for illness or maternity, as applicable, must prepare and send the declaration payroll of pension contributions in accordance with what is established in the [Norms -84), approved by the Central Bank through its Committee of Norms], to the corresponding Pension Institutions. For this, they must report all affiliates who are under a labor subordination relationship. (2)

Of the Pension Payroll Preparation System Art. 13.- Repealed. (2) Art. 14.- Repealed. (2)

Art. 15.- Repealed. (2) Art. 16.- Repealed. (2)

Art. 17.- Repealed. (2) Art. 18.- Repealed. (2)

Payment of Contributions Art. 19.- The payment of pension contributions must be made directly by the employer or the entity paying disability subsidies for illness or maternity, on account of the worker. Such payment, as well as that made by the voluntary contributor, must be made through the financial institutions with which the pension institute has signed a collection contract.

Payment Deadline Art. 20.- Employers and the entity paying disability subsidies for illness or maternity, once the amount of contributions for workers under their charge has been determined, must proceed to pay them within the first ten business days of the month following the month of withholding.

Payments made after the deadline indicated above shall be subject to what is provided in Article 24 of these Standards.

Means of Payment Art. 21.- The payment of pension contributions may be made by the following means: a) Cash: when paid in legal tender; b) Charge to account: when the payment is made directly from the employer's bank account; c) Check: when the payment is made by own, certified, or crossed check, Commercial Code; or d) Electronic: when the payment is made by digital means.

The teller of the collecting institution must sign and stamp "received and cancelled" on the payment receipt when the employer or the delegate, if applicable, pays the pension contribution payroll. In the event that the employer makes the payment of contributions by electronic means, the financial institution must generate a reference number with which the employer can prove that their payment was effectively made.

Declaration of Payment Art. 22.- The declaration of contribution payment payrolls can be considered as: a) Declaration and payment: when such payrolls are presented and paid within the first ten business days of the month following the month of withholding; or b) Declaration and non-payment: when such payrolls are presented, but the corresponding payment is not made effective.

Payment Procedure Art. 23.- To make the payment of contributions, employers must comply with the following: a) That the payments registered in a payroll correspond to the withholdings of the same month of accrual; b) That the payroll is completed in its entirety by the pension payroll manager referred to in Article 15 of these Standards; c) That in cases where employers pay mandatory contributions corresponding to previous periods, they must fill out a separate payroll for each month; d) If the employer makes the payment at the counter of the collecting entity, they must attach it to the pension payroll payment receipt; e) Attach to the payment receipt, cash or certified check or crossed check, payable to the order of the ISSS Pension Unit or the ISP; and f) If the employer makes the payment by electronic means, they may do so through a funds transfer order or other existing electronic procedure.

Upon completion of the transaction, the employer must print a payment receipt related to the corresponding payroll.

Late Payment of Contributions Art. 24.- When employers incur in late payment of contributions, the ISSS or the ISP shall be obligated to initiate actions aimed at the administrative collection of the owed contributions, late payment fines, and their moratory interest.

For the case of the Public Sector, the sanctions referred to in the previous clause shall be applied in accordance with the administrative regimes of each Institution.

The ISSS and the ISP must communicate monthly to the Superintendent about the late payments incurred by employers and paymasters.

CHAPTER III OF THE PAYMENT AND COLLECTION OF VOLUNTARY CONTRIBUTIONS

Voluntary Contributions Art. 25.- Affiliates to the SPP who have ceased employment without having the right to an old-age pension in the ISSS or in the ISP, may contribute voluntarily until completing the minimum years of contributions indicated in Article 97 of the SP Law.

Pensioners for disability due to common or professional risks who do not perform remunerated activity may contribute the percentage indicated in Article 16 of the SP Law, taking as IBC the pension they receive.

Requirements Art. 26.- Affiliates to the SPP who wish to contribute voluntarily must prove twelve months or more of continuous or discontinuous contributions and submit to the following provisions: a) Submit a request to the ISSS or the ISP, as applicable, in accordance with Annex No. 1 of these Standards, with the purpose of completing the minimum time required by the SP Law to enjoy a benefit.

Such request must be presented within the period of twelve months following the date of their cessation from remunerated employment, a period after which this right shall be extinguished.

The pension institute shall have thirty business days from receipt of the request to authorize or reject it, by issuing a resolution, which shall be delivered to the affiliate on the day indicated when they present the request. The person in charge of receiving such requests must verify that the form contains all the required information to avoid rejection of requests for lack of information.

When the Pension Institute authorizes the affiliate to contribute voluntarily, the notification must detail the amount of the IBC used to calculate the contribution, the amount of the contribution itself, and the declaration of compliance with the requirements established in these Standards to be able to contribute voluntarily.

In the event of rejection of a request, the notification must detail the reason for the rejection; b) Once the previous procedure is completed, the voluntary contributor must cancel the accumulated contribution quotas from the date the request was presented, within thirty days following the notification of the resolution approving said request; if they do not do so, they will lose the right; c) Voluntary contributing affiliates and those who wish to obtain this benefit must make monthly payment of the corresponding pension contributions, in accordance with the percentage indicated in Article 16 of the SP Law, within the first ten business days of each month; d) The quality of voluntary contributor shall be lost when the affiliate fails to pay twelve consecutive monthly contributions or performs remunerated work, a condition that must be notified in the resolution.

When the pension institute is notified that an insured person has incorporated into remunerated work, without abandoning their quality of voluntary SPP contributor in any of the pension institutes of the SPP, the institution that authorized them to incorporate as a voluntary SPP contributor must inform them that it is not appropriate to make further voluntary contributions to the SPP from the date they began to make them obligatorily. Once informed, the worker may request the return of the voluntarily paid contributions made in error; and e) The payment of voluntary contributions must be made during the business days of the month to which they correspond, except those indicated in letter b) of this article.

Repealed. (2)

Contribution Base Income of Voluntary Contributors Art. 27.- The IBC on which the amount of voluntary contributions will be determined shall be the average of the last three calendar months contributed in full.

In the event that said average is less than the current minimum wage, the latter shall be taken as the IBC.

The voluntary SPP contributor may, once a year, increase the IBC of the contribution they are making, prior to authorization by the Pension Institute.

Form of Payment Art. 28.- Affiliates who contribute voluntarily must make the payment of contributions at the collecting institution, by means of a pension contribution payment receipt, according to the format established in Annex No. 2 of these Standards, provided by the corresponding pension institute. (2)

The receipt referred to in the previous clause must be prepared in original and duplicate, and the distribution shall be effected as follows: a) Original for the pension institute; and b) Duplicate for the Contributor.

The pension institute may add a copy to expedite its internal processes. The person in charge of receiving the voluntary pension contribution must sign and stamp as received on the payment receipt.

CHAPTER IV OF THE ACCREDITATION OF CONTRIBUTIONS

Reconciliation Art. 29.- Once the payments of contributions have been made, the following procedure shall be carried out: a) Financial institutions shall send to the corresponding pension institute, the day following receipt of payments, a detail of them, indicating the date of receipt at the cash register and the receiving agency; b) Financial institutions shall provide the corresponding pension institute with a copy of the payment receipts of voluntary contributors, within a period not exceeding three business days after receipt; and c) The pension institute, once it has received the information indicated in the previous letter, shall proceed to verify the amounts deposited, subsequently must carry out its reconciliation and accreditation processes within a period not exceeding thirty business days, counted from the day following the expiration of the deadline for the payment of contributions.

Registration of Contributions Art. 30.- In order to continue the process of reconciliation and accreditation, the pension institutes shall proceed to review the data registered in the contribution payment payroll based on the following criteria: a) For the case of mandatory contributions, they must verify the amount thereof on the monthly IBC reported for each worker, based on the percentage established in Article 16 of the SP Law. If this result coincides with what the pension contribution payment payroll shows, the contribution shall be fully validated and assigned; otherwise, the Pension Institute must establish the amount of overpayment or underpayment, as applicable. In the event of underpayment or overpayments, the pension institute must proceed in accordance with what is established in Chapter V of these Standards; and b) When [text cuts off]