Technical Standards for the Management of Pension Arrears, Omissions, and Inconsistencies in Contributions in the Pension System

CNBCR-11/2022
NSP-55
TECHNICAL STANDARDS FOR THE MANAGEMENT OF PENSION ARREARS, OMISSIONS AND INCONSISTENCIES OF CONTRIBUTIONS IN THE 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, of December 20, 2022, published in the Official Journal No. 241, Volume No. 437 of the 21st of the same month and year, the Comprehensive Pension System Law was issued.
II. That Article 21 of the Comprehensive Pension System Law states that contributions must be declared and paid by the employer, the independent worker, or the entity paying disability subsidies for illness, as applicable, to the Administrator to which each worker is affiliated.
III. That Article 22 of the Comprehensive Pension System Law establishes in its last paragraph that the procedure to be followed for the treatment and cleaning up of the omissions and inconsistencies referred to in said article, will be defined in the technical standards issued for such purposes.
IV. That Article 23 of the Comprehensive Pension System Law establishes that Administrators are obliged to initiate administrative collection procedures in order to require employers to pay arrears in contributions.
V. That Article 24 of the Comprehensive Pension System Law establishes in its last paragraph that for the purposes of developing judicial collection actions, a technical standard will be issued in which the procedure to be followed to execute them will be indicated.
VI. That Article 159 of the Comprehensive Pension System Law establishes that the Central Reserve Bank of El Salvador will issue the Technical Standards necessary to allow the development of what is established in the referred Law.

THEREFORE, in 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 MANAGEMENT OF PENSION ARREARS, OMISSIONS AND INCONSISTENCIES OF CONTRIBUTIONS IN THE PENSION SYSTEM

CNBCR-11/2022
NSP-55
TECHNICAL STANDARDS FOR THE MANAGEMENT OF PENSION ARREARS, OMISSIONS AND INCONSISTENCIES OF CONTRIBUTIONS IN THE PENSION SYSTEM Approval: 12/30/2022 Validity: 12/30/2022

CHAPTER I
OBJECT, SUBJECTS AND TERMS

Object
Art. 1.- These Standards have as their object to regulate the procedure to be followed for the treatment and cleaning up of omissions and inconsistencies in the declarations and payment of pension contributions that may arise, as well as the procedure to be followed to execute collection actions, both administrative and judicial, that may derive from them.

Subjects
Art. 2.- The subjects obliged to comply with the provisions established in these Standards are the following pension institutions:
a) Pension Fund Administrators; b) Salvadoran Institute of Pensions; and c) Salvadoran Institute of Social Security.

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) AFP: Pension Fund Administrator; b) Central Bank: Central Reserve Bank of El Salvador; c) CIAP: Individual Savings Account for Pensions; d) Identity Document: It may be the Unique Identity Document, Minor's Card, Passport, or Resident Card, as applicable; e) DUI: Unique Identity Document; f) Payment Excesses: Values generated in the system after an accreditation process, having evidence that the employer overpaid in the payroll, as a result of calculation errors; g) INPEP Affiliation Number: Number issued by the National Institute of Pensions of Public Employees to its affiliates, prior to the entry into force of the Law Creating the Salvadoran Institute of Pensions; h) ISSS: Salvadoran Institute of Social Security; i) IBC: Contribution Base Income; j) Shortfalls: Debt generated in the system after an accreditation process, having evidence that the employer submitted payrolls with calculation errors; k) Pension Institutions: For the purposes of these Standards, Pension Institutions are the Pension Fund Administrators, the Salvadoran Institute of Social Security, and the Salvadoran Institute of Pensions; l) Pension Institutes: For the purposes of these Standards, Pension Institutes are the Salvadoran Institute of Social Security and the Salvadoran Institute of Pensions; m) SP Law: Comprehensive Pension System Law; n) Ministry of Labor: Ministry of Labor and Social Welfare; o) NIT: Tax Identification Number; p) SP: Pension System; q) Repealed; and (2) r) Superintendence: Superintendence of the Financial System.

CHAPTER II
GENERALITIES OF THE OBLIGATION TO PAY CONTRIBUTIONS TO THE PENSION SYSTEM

Mandatory Contributions
Art. 4.- During the validity of the labor relationship, workers and employers must make contributions monthly and obligatorily to the SP according to what is established in Article 13 of the SP Law. The contribution rates for workers and employers will be those indicated in Article 16 of the SP Law. Each employer will report to the Pension Institutions all affiliates under their labor subordination, in the pension contribution payroll, which must be declared -84), approved by the Central Bank through its Committee of Norms. Any declared payroll that is unpaid or has a payment shortfall will constitute arrears in contributions. (2)

Payment Deadline for Contributions
Art. 5.- The declaration and payment must be made within the first ten business days of the month following that in which the affected income was accrued, or that in which the medical leave was authorized by the corresponding entity, as applicable. shortfalls and those declared and unpaid, payrolls with inconsistencies and omissions, according to (NSP-40), in the Pension Fund and when the recovery of the same is carried out, the respective amounts will be transferred to the individual accounts of the Pension Fund. (1)

Omissions in Pension Declarations
Art. 6.- An omission in the declaration and payment of pension contributions will be considered to exist when the employer does not comply with this obligation within the legal deadline, for one or more workers, with respect to those included in the payroll of a previous accrual month, without having informed the corresponding Pension Institution of the changes in the labor relationship. In the case of non-compliance with the obligation to present the declaration and payment of contributions established in the first paragraph of this article, the procedure will be carried out in accordance with what is provided in letters a) and b) of Article 143 and what is provided in Article 146 of the SP Law. (1) The fines and interest that apply will form part of the resources of the Pension Fund in accordance with what is established in Article 77 of the referred Law and be -40).

Inconsistencies in Pension Declarations
Art. 7.- Inconsistencies in pension contributions will be considered to exist when the information declared in the payroll by the employer does not allow the accreditation of contributions in the individual accounts for AFPs and in the work history for Pension Institutes.

Lost Profitability
Art. 8.- Lost profitability will be calculated in accordance with what is established in the Technical Standards for the Management of Current Accounts and the Functioning of the Collection, Accreditation, and Information Transmission Process to Affiliates of the System -51), approved by the Central Bank, through its Committee of Norms.

CHAPTER III
OMISSIONS AND INCONSISTENCIES

Art. 9.- Pension Institutions must determine the omissions and inconsistencies of the payrolls declared by employers. To do this, they must implement validations, alerts, and reports that are necessary to determine them without room for error. Art. 10.- Once the contribution accreditation process is finished, Pension Institutions must generate monthly individual reports by employer, containing information related to omissions and inconsistencies derived from the declared payrolls. In case of omissions or inconsistencies, Pension Institutions must notify employers, within a maximum period of twenty business days counted from the

CNBCR-11/2022
NSP-55
TECHNICAL STANDARDS FOR THE MANAGEMENT OF PENSION ARREARS, OMISSIONS AND INCONSISTENCIES OF CONTRIBUTIONS IN THE PENSION SYSTEM Approval: 12/30/2022 Validity: 12/30/2022

completion of the accreditation period carried out by the Pension Institutions. Employers will have a maximum period of ten business days after being notified, to completely remedy the omissions or inconsistencies, which must be proven with the payment receipt or another means that guarantees the non-existence of the omission or inconsistency of the declaration and payment of the pension payroll. The notice to employers must contain the general details of the employer, the affiliate for whom no declaration was made, and the periods corresponding to the omission or inconsistency. Any notification that Pension Institutions make may be carried out through any means, including written, electronic, telephone, or others, as long as they are subject to verification or there is evidence of notification. Art. 11.- Pension Institutions will notify the Ministry of Labor quarterly about employers who, during the quarter elapsed since the last notification, have not provided information to remedy such omissions or inconsistencies, requesting that it proceed to carry out the corresponding inspection, in accordance with the Law on Organization and Functions of the Labor and Social Welfare Sector, in order to determine possible non-compliance with the declaration and payment of pension contributions. The notification may be carried out through the means that said Ministry makes available. In case of determining non-compliance, the Ministry of Labor within the period of twenty business days counted from the day following the respective inspection, must issue a certification to the Pension Institutions and the Superintendence, containing the same information as the contribution payrolls, so that the Pension Institutions process the information contained in said certification and determine the debt within the period of twenty business days counted from the receipt of the certification, notifying within the following ten business days to the employers to proceed with the declaration and payment of the owed contributions. Employers will have a maximum period of ten business days after being notified, for the declaration and payment of the respective contributions. Communication to the Ministry of Labor Art. 12.- Pension Institutions will provide the Ministry of Labor with complete and sufficient information about employers who have not remedied the omissions and inconsistencies, detailing at minimum the following information:
a) Regarding employers: type of person (natural or legal), full name or trade name, DUI in case of natural person, full name of the legal representative in case of companies, NIT, and ISSS patronal number, full address, telephone numbers, and email; and

CNBCR-11/2022
NSP-55
TECHNICAL STANDARDS FOR THE MANAGEMENT OF PENSION ARREARS, OMISSIONS AND INCONSISTENCIES OF CONTRIBUTIONS IN THE PENSION SYSTEM Approval: 12/30/2022 Validity: 12/30/2022

b) Regarding affiliated workers: full name, type and number of identity document, ISSS affiliation number or INPEP affiliation number, IBC, detail of the omitted periods or with inconsistencies.

Art. 13.- Pension Institutions must carry out said notifications through the means designated by the Ministry of Labor during the last five business days of the months of March, June, September, and December of each year, as indicated in the following table:
Period to report
Notification Date to the Ministry of
Labor / last five business days
January to March June
April to June September
July to September December
October to December March
In case the employer makes the payment of pension contributions in accordance with what is established in these Standards, Pension Institutions will proceed to remove them from the list of files to be notified to the Ministry of Labor, or in case the information has already been sent to the Ministry of Labor and the employer pays the pension contributions, Pension Institutions must notify said situation to said Ministry.
CHAPTER IV
ON ADMINISTRATIVE COLLECTION

Art. 14.- Pension Institutions are obliged to initiate administrative collection procedures, in order to require employers to pay arrears in contributions, in the following situations:
a) When an employer has declared and failed to pay the pension contribution payroll in total or partially; or b) When Pension Institutions have registered pension contributions pending payment, resulting from the procedures established in Chapters II and III of these Standards. For the previous situations, Pension Institutions must initiate administrative collection procedures within a maximum period of thirty business days, counted from the end of the payroll accreditation period or from the closing date of the accounting month, respectively. The administrative collection process will be temporarily suspended when, having carried out the necessary procedures by the Pension Institutions, it has not been possible to locate the employer who has not complied with the obligations to pay pension contributions. Pension Institutions may request updated information on the employer's address and Tax Identification Number from the Ministry of Finance, who will be obliged to provide said information for such purposes. The collection management will be resumed upon learning of the employer's location. Art. 15.- To carry out administrative collection procedures, Pension Institutions may use any legal means they deem appropriate, in order to recover the pension debt, in accordance with the applicable Law. The collection management must refer to the total pension debt of the employer.

Art. 16.- To initiate the administrative collection procedure, Pension Institutions must inform the employer, under acknowledgment of receipt, about the non-compliance with payment within the legal deadline, specifying the unpaid periods. Any notification that Pension Institutions make may be carried out through any means, which can be written, electronic, telephone, among others, as long as they are subject to verification or there is evidence of receipt. Repealed. (2) Repealed. (2) Art. 17.- The employer must present within a period of five business days counted from the day following the notification, proof of defense or the respective contribution payroll duly canceled. In case of presenting proof of defense, they will be accepted by the Pension Institutions only if attached are reliable documents supporting the observations. If proof of defense duly supported by the employer has been presented, the Pension Institutions must resolve on them within a period of five business days after receiving the proofs, and if collection proceeds, the employer must prepare a complementary payroll, which may be presented and -84), approved by the Central Bank through its Committee of Norms, which includes the declaration of those workers whose contribution was omitted or reported incorrectly in their original declaration, and the amount of lost profitability will be included in the payment receipt generated by the same system. (2) Art. 18.- Pension Institutions must inform employers that the Superintendence will make available, through the Risk Central, information

CNBCR-11/2022
NSP-55
TECHNICAL STANDARDS FOR THE MANAGEMENT OF PENSION ARREARS, OMISSIONS AND INCONSISTENCIES OF CONTRIBUTIONS IN THE PENSION SYSTEM Approval: 12/30/2022 Validity: 12/30/2022

regarding employers who register non-compliance with their obligation to declare and pay pension contributions, as established in Article 21 of the SP Law.
Likewise, they must inform employers of the conditions established in Article 22 of the referred Law and the deadline with which they will have to carry out the declaration and payment of the owed contributions.

Grounds for Exhaustion of Administrative Collection Art. 19.- It will be understood that administrative collection procedures have been exhausted in the following situations:
a) When the employer, within a period not greater than ninety days after the initiation of collection procedures, has not made any payment to the debt of contributions that are pending payment; b) When the employer, having committed to make the payment of the owed contributions through any legally permitted means, has failed to comply continuously for two months; or c) When, having been required to comply with the payment of contributions paid in amounts lower than what corresponds, the employer does not respond or refuses to comply with their obligation within a maximum period of ninety days after the initiation of the first administrative collection procedure. Once the administrative collection procedure is exhausted without having recovered the owed sum, the Pension Institutions, legitimized by virtue of the law, will initiate the judicial collection procedure. The judicial collection process will proceed in accordance with what is provided in Article 24 of the SP Law and the provisions of the Civil and Commercial Procedural Code. In no case will it be necessary for the Pension Institutions to exhaust the maximum period contemplated above, being able to initiate the judicial collection procedure at the moment they deem most appropriate, unless during the same the employers commit to making the payment of the arrears in contributions, leaving the ninety-day period interrupted while it lasts and is complied with. For the initiation of the judicial action, it will not be necessary to prove that administrative collection procedures have been carried out. To said processes, only various claims of the same nature can be accumulated, against the same employer. In the case that the arrears in contributions correspond only to the net commissions of the AFP, it may desist from carrying out collection actions. The forgiveness of this debt must be duly documented. Art. 20.- Once the deadline for the administrative collection of pension arrears has expired and the owed sum has not been recovered, the Pension Institutions must initiate the corresponding legal actions, in accordance with what is established in Article 24 of the SP Law.

Art. 21.- The arrears in contributions attributable to the employer may be paid directly by the affiliate, or by their beneficiaries in case of the affiliate's accident, as long as it is demonstrated that a labor dependency relationship existed; in such cases, the affiliate or their beneficiaries will pay the necessary contributions at nominal value, to access a benefit in accordance with what is established in the SP Law, without prejudice to the sanctions that could be applied in accordance with Articles 143, 144, 145, and 146 of the SP Law and the legal actions that could be incorporated against the employer. The payment of contributions referred to in the previous paragraph may be carried out through the mechanisms established by the Pension Institutions, carried out by the claimant or beneficiaries, in any case, these contributions cannot be deducted from the debt that the employer has. Art. 22.- Pension Institutions must keep a detailed control by employer, of the administrative and judicial collection procedures they execute, as well as the recovery they obtain from pension arrears; including the information requests they make to the Ministry of Finance, to update the records of employers.
CHAPTER V
INCONSISTENCIES DUE TO ERRORS IN THE PENSION CONTRIBUTION PAYROLL

Definition
Art. 23.- Errors in the pension contribution payroll may occur when an IBC that does not correspond to the affiliate is declared or due to errors in the preparation of the payroll. (1) Payment Shortfalls Art. 24.- For the accreditation of a payroll with a payment shortfall, AFPs Current Accounts and the Functioning of the Collection, Accreditation, and Information Transmission Process to Affiliates of the System -51) and for the case of the pension institutes