TECHNICAL STANDARDS FOR THE REQUIREMENT OF INFORMATION TO PENSION FUND ADMINISTRATORS FOR THE CONTROL OF INVESTMENTS MADE WITH PENSION FUND RESOURCES

CNBCR-11/2022
Approval: 12/30/2022
Effective Date: 03/01/2023

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

CONSIDERING:

I. That by Legislative Decree No. 614, dated December 20, 2022, and published in Official Diary No. 241, Volume No. 437 on December 21, 2022, the Comprehensive Pension System Law was approved.

II. That Article 2, letter g) of the Comprehensive Pension System Law, establishes that each Pension Fund Administrator will manage a Pension Fund, which will be constituted by the set of individual savings accounts for pensions and the solidarity guarantee account, and will be separate from the Administrator's equity.

III. That Article 45 of the Comprehensive Pension System Law establishes that the Central Bank, through its Standards Committee, will issue the corresponding accounting regulations in which the accounting obligations of the Administrators and the pension fund, the mandatory accounting principles, and the provisions for the formulation of Financial Statements will be determined. All of this with the objective of reflecting the true financial situation of the Administrators.

IV. That Article 159 of the Comprehensive Pension System Law establishes that the Central Reserve Bank of El Salvador will issue the Technical Standards and Resolutions necessary to allow the development of what is established in the aforementioned Law.

V. That in accordance with Article 6 of the Law on Supervision and Regulation of the Financial System, it is the responsibility of the Superintendency of the Financial System to supervise compliance with applicable provisions and the functioning of the Pension Savings System; the investments made with resources from the Pension Funds; the constitution, maintenance, operation, and application of minimum yield guarantees and special guarantee contributions, among others.

VI. That in order to obtain greater agility in the validation and sending of electronic information, accessibility, security, and availability of information on the operations of the Pension Funds carried out by the Administrators of said funds, it is necessary to issue Standards, incorporating aspects derived from the provisions of the Comprehensive Pension System Law.

VII. That in accordance with Article 99, letters a) and b) of the Law on Supervision and Regulation of the Financial System, the Central Reserve Bank of El Salvador is the institution responsible for the approval of technical standards related to the transparency of information by the supervised entities.

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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 REQUIREMENT OF INFORMATION TO PENSION FUND ADMINISTRATORS FOR THE CONTROL OF INVESTMENTS MADE WITH PENSION FUND RESOURCES

CHAPTER I

OBJECT, SUBJECTS, AND TERMS

Object
Art. 1.- These Standards aim to define the information that Pension Fund Administrators must provide to the Superintendency of the Financial System regarding the operations they carry out with the resources of the Pension Fund they administer, in accordance with what is established in the Investment Regulations applicable to pension funds.

Subjects
Art. 2.- The subjects obliged to comply with the provisions established in these Standards are the Pension Fund Administrators.

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:

a) AEG: Special Guarantee Contribution; b) AFP: Pension Fund Administrator; c) Central Bank: Central Reserve Bank of El Salvador; d) CIAP: Individual Savings Account(s) for Pensions; e) Fund: Pension Fund; f) SP: Pension System; g) SPP: Public Pension System; and h) Superintendency: Superintendency of the Financial System.

CHAPTER II

REQUIRED INFORMATION

Art. 4.- The AFPs will send a Daily Report and a Monthly Report of the operations they carry out with the resources of the Fund they administer, through the electronic means established by the Superintendency.

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Art. 5.- To develop its supervision and auditing activities, the Superintendency is empowered to request the information cited in the preceding article with the frequency and at the time it deems convenient.

Daily Report

Art. 6.- The Daily Report will be composed of the following Annexes:

a) Annex No. 1: General Balance Sheet and Determination of the Pension Fund Share Value. Corresponds to the accounts and subaccounts of the General Balance Sheet defined in the "Accounting Manual for Pension Funds" (NSP-40) and its respective modifications; as well as the information on the calculation of the Fund's share value;

b) Annex No. 2: Requirement for Special Guarantee Contribution. Daily requirement that the AFP must maintain as AEG, to determine if there is a surplus or deficit;

c) Annex No. 3: Cash Flow of the Pension Fund. Daily movements of gross income and expenses from the current accounts managed by AFPs in financial entities that are supervised by the Superintendency, as provided in the Technical Standards related to their management. Transfer and arrears movements must be reported in gross terms, that is, on the income side, what corresponds to the compensation of received transfers and arrears, and on the expense side, what corresponds to the compensation of transfers and arrears sent to other AFPs;

d) Annex No. 4: Variation in the Number of Shares of the Managed Fund. Detail of the initial and final balance of the Fund's equity, the AEG, and the voluntary shares of the AFPs, corresponding to the transaction date;

e) Annex No. 5: Daily Movements of the Pension Fund Portfolio and Securities in Custody. Detail of the movement of investments in financial instruments made with the resources of the Pension Fund.
Custody operations will be reported at the moment they are effectively registered in the contracted custody company, at the Central Reserve Bank, or in the AFP's offices; and in the case of the primary market, when the securities or receipts have been book-entry or physically received in the facilities of any of the aforementioned entities as appropriate, by authorized personnel. Any unjustified difference will be recorded as a custody deficit;

f) Annex No. 6: Crediting of Individual Savings Accounts for Pensions and Yield Obtained. Detail of the crediting, including the subsidy and arrears sheet and the yield obtained from the CIAPs;

g) Annex No. 7: Daily Control of Coupon Collection. Detail of the collection of coupons, interest, and/or principal, carried out by the AFP; and

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h) Annex No. 9: Operations with Derivative Instruments that Have the Exclusive Objective of Hedging Investment Risks. Each AFP, for the control of operations with derivatives that have the exclusive objective of hedging the risks of the Fund's investments, must maintain the documentation and record containing the detailed information of the operations it carries out, clearly indicating their characteristics, and must verify compliance with the minimum requirements established in the corresponding regulations.

Art. 7.- When the "OTHERS" account is used in Annexes Nos. 3, 4, and 6, the AFP must specify the concept to which the amount corresponds for the day of the reported operation and the vouchers supporting said operation. The submission of this information will be made through the electronic means established by the Superintendency.

Art. 8.- The Daily Report must be sent no later than the seventh calendar day following the transaction date.
When the delivery day corresponds to a non-business day, the reports will be delivered on the next business day.

Monthly Report

Art. 9.- Monthly, each AFP must send to the Superintendency the inventory of financial instruments at the close of each calendar month, valued at the prices provided by the Superintendency corresponding to the closing date, according to Annex No. 8.

Art. 10.- The Monthly Report must be sent no later than the next business day after the date of sending the Daily Report corresponding to the last day of the month.

Monetary Units

Art. 11.- All monetary accounts and subaccounts of the Daily Report and Monthly Report will be expressed in United States Dollars. Operations in any other currency will be converted to United States Dollars, possibly taking as reference the exchange rate published by the Central Bank on its website or an international stock or financial information system recognized by the Superintendency.

Substitution of Information

Art. 12.- In cases where the Superintendency determines that the substitution of the Daily Report or the Monthly Report is warranted, it will inform the AFP by the means it deems convenient, no later than the next business day of its finding.
In these cases, the AFP must send a letter signed by the President or by an Attorney-in-Fact, duly authorized for this purpose, with the necessary explanations.

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CNBCR-11/2022                                                                 NSP-41
Approval: 12/30/2022                                                         TECHNICAL STANDARDS FOR THE REQUIREMENT OF INFORMATION TO PENSION FUND ADMINISTRATORS FOR THE CONTROL OF INVESTMENTS MADE WITH PENSION FUND RESOURCES
Effective Date: 03/01/2023

Art. 13.- The AFP must send the new information no later than the next business day of the respective notification.

However, if the substitution of the information requires a period longer than that established, the AFP must request it through a letter signed by the President or by an authorized Attorney-in-Fact, clearly explaining the causes for which it cannot comply with the period established in the previous paragraph.

Art. 14.- If after sending the Reports, the AFP determines that it is necessary to replace them, it must request the respective substitution, justifying it appropriately through a letter signed by the President or an authorized Attorney-in-Fact.

Non-compliance with the submission date
Art. 15.- The AFP that fails to meet the dates established for the sending of the Daily Report and the Monthly Report must send no later than the dates established in articles 9 and 10 of these Standards, a letter signed by the President or by an Attorney-in-Fact duly authorized for this purpose, in which it clearly explains the causes of the non-compliance, presents the way to solve the delay, and indicates the administrative measures that will be taken to avoid the recurrence of non-compliances. (1)

Reports for non-business days
Art. 16.- The Daily Report and the Monthly Report must be prepared even for non-business days and sent, even if there are no changes or movements on the respective day.

Supporting documentation
Art. 17.- The AFP must keep in its administrative offices the supporting documentation of the investment operations of the resources of the Fund it administers, in such a way as to facilitate its auditing when the Superintendency requires it.

CHAPTER III
INSTRUCTIONS TO COMPLETE THE REPORTS

General instructions
Art. 18.- In the field provided in the Reports, the following information will be indicated: the type or number of Annex of the Report as established by article 6 of these Standards; the code of the AFP assigned by the Superintendency; the date of sending, which refers to the date on which the report is sent to the Superintendency, in the year/month/day format; the type of movement, when applicable; the transaction date, which refers to the date of the day reported, in the year/month/day format, if it is the Daily Report, and in the year/month format, if it refers to the content of the Monthly Report; and the content columns detailed for each Report.

Art. 19.- For the calculation of all operations, eight decimals will be used. The submission of numerical information will be required as follows: the number of

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CNBCR-11/2022                                                                 NSP-41
Approval: 12/30/2022                                                         TECHNICAL STANDARDS FOR THE REQUIREMENT OF INFORMATION TO PENSION FUND ADMINISTRATORS FOR THE CONTROL OF INVESTMENTS MADE WITH PENSION FUND RESOURCES
Effective Date: 03/01/2023

shares, the share value, the traded price, and the valuation price with eight decimals, and the accounting balances and other accounts with two decimals. The eighth decimal will be rounded up to the next higher digit when the ninth decimal is greater than or equal to five, otherwise it will not be rounded.

Art. 20.- The description of the accounts for the reports that correspond, must be detailed in uppercase letters and without accents.

CHAPTER IV
OTHER PROVISIONS AND EFFECTIVE DATE

Sending of information
Art. 21.- The Superintendency will send to the AFPs, with a copy to the Central Bank, the technical details related to the Daily Report and the Monthly Report, which will be communicated within a maximum period of thirty (30) business days following the entry into force of these Standards. The technical details will be limited to the collection of information as regulated in these Standards.

The AFPs must implement the necessary mechanisms for the sending of the information within a maximum period of thirty (30) days, counted from the date of having received the note from the Superintendency referred to in the first paragraph of this article.

Art. 22.- The Superintendency will send to the AFPs, with a copy to the Central Bank, the technical details related to the new fields, which will be communicated within a maximum period of thirty (30) business days following the entry into force of these modifications. The technical details will be limited to the collection of information as regulated in these Standards. During this period, the AFP must send the information to the Superintendency by the means it defines.

Art. 23.- The Superintendency will send to the Central Bank, within a period not greater than five business days after the period established in article 10 of these Standards, the monthly report referred to in article 9 of these Standards, duly processed, in order to monitor risks for financial stability and generate economic and financial statistics, in accordance with what is established in article 155 of the SP Law.

Links
Art. 24.- The AFPs will designate at least two people responsible for sending to the Superintendency the information on the Reports referred to in these Standards, being the links with the Superintendency to resolve errors, omissions, and irregularities that it contains.

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CNBCR-11/2022                                                                 NSP-41
Approval: 12/30/2022                                                         TECHNICAL STANDARDS FOR THE REQUIREMENT OF INFORMATION TO PENSION FUND ADMINISTRATORS FOR THE CONTROL OF INVESTMENTS MADE WITH PENSION FUND RESOURCES
Effective Date: 03/01/2023

Sanctions
Art. 25.- Non-compliance with the provisions contained in these Standards will be sanctioned in accordance with what is established in the Law on Supervision and Regulation of the Financial System.

Repeal
Art. 26.- These Standards repeal the "Technical Standards for the Requirement of Information to Institutional Administrators of Pension Funds for the Control of Investments Made with Pension Fund Resources" (NSP-02), approved by the Standards Committee of the Central Reserve Bank of El Salvador, in Session No. CN-08/2017, of October 27, 2017.

Unforeseen Aspects
Art. 27.- The aspects not provided for in the matter of regulation in these Standards will be resolved by the Central Bank, through its Standards Committee.

Effective Date
Art. 28.- These Standards will enter into force as of March 1, 2023.

MODIFICATIONS:
(1) Modifications in article 15 and Annexes Nos. 1, 3, and 4, approved by the Central Reserve Bank of El Salvador through its Standards Committee in Session No. CN-09/2023 of September 26, 2023, with effect from October 11, 2023.
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