Technical Standards for the Transfer of Funds Due to Annulment of Affiliation Contracts in the Pension System

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TECHNICAL STANDARDS FOR THE TRANSFER OF FUNDS DUE TO ANNULMENT OF AFFILIATION CONTRACTS IN THE PENSION SYSTEM

Approval: 12/30/2022 Effective Date: 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 Diary No. 241, Volume No. 437 of December 21, 2022, the Comprehensive Law of the Pension System was issued, thereby creating the Pension System for workers in the private, public, and municipal sectors. II. That Article 4 of the Comprehensive Law of the Pension System establishes that the Central Reserve Bank of El Salvador, through its Committee of Norms, shall be responsible for issuing the corresponding technical regulations to facilitate the application of said Law. III. That Article 5 of the Comprehensive Law of the Pension System defines affiliation as a legal relationship between a natural person and a Pension Fund Administrator, which originates the rights and obligations established by said Law, especially the right to benefits which shall take effect upon the generation of contributions, while the obligation to contribute shall take effect from the date of validity of the worker's affiliation contract, when there is a labor relationship. Affiliation may be carried out through electronic means made available by the Administrator to the affiliates. With the first affiliation contract with an Administrator, the person shall become affiliated with the System. IV. That Article 6 of the Comprehensive Law of the Pension System provides that any affiliation to the System shall be individual and shall subsist during the life of the affiliate, whether or not they are engaged in labor activity, and that every person must choose, individually and freely, the Administrator to which they wish to affiliate by signing a contract and opening an Individual Savings Account for Pensions. V. That paragraphs three and seven of Article 6 of the Comprehensive Law of the Pension System establish that Administrators shall not reject the affiliation request of any natural person, if it proceeds in accordance with said Law, and that under no circumstances may an affiliate be obligated to contribute to more than one Administrator. VI. That Article 159 of the Comprehensive Law of the Pension System establishes that the Central Reserve Bank of El Salvador shall issue the Technical Standards and Resolutions necessary to allow the development of what is established in this Law.

THEREFORE,

in virtue of the regulatory powers conferred by Article 99 of the Law on Supervision and Regulation of the Financial System,

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TECHNICAL STANDARDS FOR THE TRANSFER OF FUNDS DUE TO ANNULMENT OF AFFILIATION CONTRACTS IN THE PENSION SYSTEM

Approval: 12/30/2022 Effective Date: 12/30/2022

AGREES to issue the following:

TECHNICAL STANDARDS FOR THE TRANSFER OF FUNDS DUE TO ANNULMENT OF AFFILIATION CONTRACTS IN THE PENSION SYSTEM

CHAPTER I OBJECT, SUBJECTS AND TERMS

Object Art. 1.- These Norms aim to establish the minimum provisions for the process of fund transfers that Pension Fund Administrators must carry out to the Pension Institutes or to another Administrator, in the event of an annulment of an affiliation contract in the Pension System.

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

Terms Art. 3.- For the purposes of these Norms, the terms indicated below have the following meaning: a) Affiliate: Any person who maintains a relationship with a Pension Fund Administrator, through the signing of an affiliation contract; b) AFP: Pension Fund Administrator; c) Contributions: Payments made to the Solidarity Guarantee Account; d) Central Bank: Central Reserve Bank of El Salvador; e) Contract: Affiliation contract with an AFP; f) CGS: Solidarity Guarantee Account; in accordance with Article 119 of the Comprehensive Law of the Pension System, it is the mechanism that assumes the present and future financing and payment of the Minimum Pension and the obligations corresponding to the Pension Institutes of the Public Pension System, with the objective of giving sustainability to the payment of pensions, in a stable and lifelong manner; g) CIAP: Individual Savings Account for Pensions; h) Contributions: Payments that dependent and independent workers and employers make, as established in the Comprehensive Law of the Pension System. Contributions shall also be considered as those payments made by pensioned affiliates who continue to contribute to the Pension System; i) Identity Document: Refers to the Unique Identity Document, Minor's Card, Passport, or Resident Card, as applicable;

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TECHNICAL STANDARDS FOR THE TRANSFER OF FUNDS DUE TO ANNULMENT OF AFFILIATION CONTRACTS IN THE PENSION SYSTEM

Approval: 12/30/2022 Effective Date: 12/30/2022

j) History: Individual work history of the affiliate or worker; k) IBC: Contribution Base Income; l) Pension Institute: any of the following Institutions: Salvadoran Institute of Social Security or Salvadoran Institute of Pensions; m) Pension Institution: any of the following Institutions: Salvadoran Institute of Social Security, Salvadoran Institute of Pensions, or AFP; n) ISP: Salvadoran Institute of Pensions; o) ISSS: Salvadoran Institute of Social Security; p) SP Law: Comprehensive Law of the Pension System; q) SP: Pension System; r) SPP: Public Pension System; and s) Superintendence: Superintendence of the Financial System.

CHAPTER II TRANSFER OF FUNDS FROM AN AFP TO INSTITUTIONS OF THE PUBLIC PENSION SYSTEM

Amount to be delivered by the AFP Art. 4.- In the case where a contract becomes void, because it was signed by a person who, in accordance with the SP Law, should not have joined the SP and as a result the worker must be reincorporated into a Pension Institute, the AFP must deliver the values for the following concepts: a) The balance of the CIAP, according to the number of valued shares at the share value current on the day of the transfer, excluding voluntary contributions and the profitability of these, if they exist, and including at nominal value the contributions made to the CGS; and b) The commissions that corresponded to the AFP; these shall be excepted from this, the rate for disability and survival insurance, in case it has been paid, for the periods prior to the month in which the contract became void, returning the total of the commissions received in the subsequent months.

Procedure for the delivery of funds Art. 5.- The AFP shall remit to the corresponding Pension Institute, no later than the thirteenth business day of the month following the notification of the resolution, the corresponding funds as established in Article 4 of these Norms, along with the forms described in Annex No. 1 of these Norms, with a distribution of the copies as follows: a) The original shall be for the AFP; b) A copy for the Pension Institute where the funds will be transferred; and c) A copy for the affiliate. These forms shall serve as proof of payment. The AFP shall be responsible for sending the proofs of payment to their respective recipients.

The procedure described above may be carried out by electronic means.

Art. 6.- In the case of voluntary contributions, the AFP must deliver them in the name and account of the worker, by the means made available by the AFP itself, which may be electronic, no later than the thirteenth business day of the month following the notification of the resolution, for the value of said voluntary contributions made and their profitability, according to the number of valued shares at the share value current on the date of transfer. The delivery of the funds must be accompanied by the proof of payment detailed in Annex No. 2 of these Norms, attending to the following indications: a) The original shall be for the AFP, it will serve as proof of payment; and b) A copy for the affiliate.

The procedure described above may be carried out by electronic means.

Procedure for crediting contributions and determination of deficiencies Art. 7.- For the purposes of accrediting the corresponding contributions that have been returned and determining any deficiencies, if any, the following procedure shall be followed: a) The proof of payment made by the AFP shall be equivalent to the presentation of the monthly payroll to the corresponding Pension Institution, which shall not cause delay and shall be credited to the worker's history; b) The IBC shall be the same as reported by the AFP, at the contribution rates that were in effect for the Pension Institution for each month of accrual, without prejudice to what is stated in paragraph d) of this article; c) The Pension Institution shall calculate the excess and/or deficiency in the payment of contributions, according to the contribution rates in effect in the SPP, for each month of accrual; d) The amount of the deficiency must be covered by the worker, if they so wish; for this purpose, the Pension Institution shall notify the worker according to the format described in Annex No. 3 of these Norms. In the event that the complement is not made, the Pension Institution must adjust the IBC to credit the declared contributions as they were received, even if they were less than the current minimum wage. The Pension Institution may agree on another form of compensation for the deficiency charged to the affiliate's benefits. The worker must pay the complement in a financial entity, presenting the charge notification mentioned in the previous paragraph, within a period of fifteen days from receiving the notification of deficiency, by the means made available by the AFP for this purpose, delivering the corresponding proof of payment to the AFP; e) The payment made within the period indicated in the previous paragraph shall be considered as paid within the legal deadline fixed by Article 21 of the SP Law, and credited to the declared period; and f) In the event of excesses or deficiencies in contributions caused by the employer, the Pension Institution must inform the affiliate about this result, while proceeding to carry out collection procedures or the corresponding refund, for the net value resulting from comparing the excesses and deficiencies in contributions.

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TECHNICAL STANDARDS FOR THE TRANSFER OF FUNDS DUE TO ANNULMENT OF AFFILIATION CONTRACTS IN THE PENSION SYSTEM

Approval: 12/30/2022 Effective Date: 12/30/2022

Reincorporation to the SPP Art. 8.- The resolution issued by the Superintendence shall be the basis for the affiliate to be able to reincorporate into the SPP. In the case of the voluntary contributor, they may reincorporate into the SPP, processing their registration as an independent worker in accordance with NSP-52, but considering as the request date that of the affiliation contract with the AFP.

CHAPTER III TRANSFER OF FUNDS BETWEEN PENSION FUND ADMINISTRATORS

Amount to be delivered by the corresponding AFP Art. 9.- When a contract becomes void, in the case that an affiliate has signed more than one contract, the AFP in which the affiliate is contributing shall deliver to the corresponding AFP the values for the following concepts: a) The balance of the CIAP composed of mandatory contributions, voluntary contributions made by the affiliate and the employer, if they exist, according to the number of valued shares at the share value current on the day of the transfer; and b) The commissions that corresponded to the AFP; these shall be excepted from this, the rate for disability and survival insurance, in case it has been paid, for the periods prior to the month in which the contract became void, returning the total of the commissions received in the subsequent months.

In the case of contributions to the CGS, the AFP must proceed in accordance with what is established in (NSP-44).

Procedure for the delivery of funds Art. 10.- The AFP shall remit to the destination AFP, no later than the thirteenth business day of the month following the notification of the resolution, the value of the components of the CIAP and its profitability, according to the number of valued shares at the share value current on the date of transfer and the commissions, as established in Article 9 of these Norms, along with the formats described in Annex No. 1 of these Norms, in the following order: a) The original shall be for the AFP; b) A copy for the AFP where the funds will be transferred; and c) A copy for the affiliate. These forms shall serve as proof of payment. The AFP shall be responsible for sending the proofs of payment to their respective recipients.

The procedure described above may be carried out by electronic means.

Procedure for crediting contributions Art. 11.- For the purposes of accrediting the corresponding contributions and payments that have been transferred, the following procedure shall be followed: a) The proof of payment made by the AFP shall be equivalent to the presentation of the monthly payroll to the corresponding AFP and shall be credited to the worker's history; b) In the event of deficiencies in contributions caused by the employer, the AFP must proceed to carry out collection procedures, in accordance with the provisions of the Technical Standards for the Management of Pension Delinquency, Omissions and Inconsistencies in Contributions in the Pension System -55), or the corresponding refund, for the net value resulting from comparing the excesses and deficiencies in contributions; and c) For the purposes of completing the work history of the affiliate, the Superintendence shall transfer to the respective AFP the corresponding information, detailed in Annex No. 3 of these Norms.

Review of calculations Art. 12.- If the worker finds any error or disagreement, they shall communicate it to the AFP within ten business days following notification of the payment. The AFP may notify in advance of the payment regarding the contributions to be returned at the current share value as a preliminary data, from which the period indicated in the previous paragraph shall be counted.

Art. 13.- From the date on which observations were received, if any, the AFP shall have ten business days to review the indicated information and proceed to make corrections.

CHAPTER IV OTHER PROVISIONS AND EFFECTIVE DATE

Sanctions Art. 14.- Non-compliance with the provisions contained in these Norms shall be sanctioned in accordance with what is established in the Law on Supervision and Regulation of the Financial System.

Repeals Art. 15.- Technical Standards for the Transfer of Funds Due to Annulment of Affiliation Contracts in the Pension Savings System -22), approved by the Committee of Norms of the Central Reserve Bank of El Salvador, in Session No. CN-08/2019, of May 24, 2019.

Unforeseen Aspects Art. 16.- Unforeseen aspects in regulatory matters in these Norms shall be resolved by the Central Bank through its Committee of Norms.

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TECHNICAL STANDARDS FOR THE TRANSFER OF FUNDS DUE TO ANNULMENT OF AFFILIATION CONTRACTS IN THE PENSION SYSTEM

Approval: 12/30/2022 Effective Date: 12/30/2022

Effective Date Art. 17.- These Norms shall enter into effect as of the thirtieth day of December of two thousand twenty-two.

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TECHNICAL STANDARDS FOR THE TRANSFER OF FUNDS DUE TO ANNULMENT OF AFFILIATION CONTRACTS IN THE PENSION SYSTEM

Approval: 12/30/2022 Effective Date: 12/30/2022

RETURN OF MANDATORY CONTRIBUTIONS WHEN AN AFFILIATION CONTRACT BECOMES VOID

The (name of the AFP), delivers on (date), the funds indicated below, as a return of mandatory contributions when the affiliation contract No. _______________ becomes void, in the name of ______________________________________________________, with Identity Document No. _____________, according to resolution of the Superintendence of the Financial System No. __________________ of date ____________, for the contributions detailed below.

In accordance with what is provided in the Technical Standards for the Transfer of Funds Due to Annulment of Affiliation Contracts in the Pension Savings System (NSP-58), the funds have been transferred in favor of the Pension Institution (ISSS/ISP/AFP), according to the balance current on the date of transfer.

This payment does not release the AFP from transferring the funds not included in this document that are perceived or identified subsequently, in favor of the referred affiliate.

Date: _________________ Employer Name: ______________________________________________________________ Address:______________________________________________________ Tel: _____________________ Employee Name: ______________________________________________ Identification Document No: ____________________________ Address:

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Affiliation Date: _______________________________ Annulment Date: _______________________

Accrual Periods Contributed Days Worked Contribution Base Income Mandatory Contributions Commission Contributions to CGS Profitability per Accrual Period Total Totals $ $ $ $ Amount to Transfer $

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TECHNICAL STANDARDS FOR THE TRANSFER OF FUNDS DUE TO ANNULMENT OF AFFILIATION CONTRACTS IN THE PENSION SYSTEM

Approval: 12/30/2022 Effective Date: 12/30/2022

RETURN OF VOLUNTARY CONTRIBUTIONS WHEN AN AFFILIATION CONTRACT BECOMES VOID

The (Name of the AFP), delivers on (Date), the funds indicated below, as a return of voluntary contributions when the affiliation contract No. ________, in the name of ___________________________, with Identity Document No. _________________________, according to resolution of the Superintendence of the Financial System No. __________ of date ___________________, for the contributions detailed below.

This payment does not release the AFP from transferring the funds not included in this document that it has perceived or will perceive subsequently.

Date: ___________ Employee Name: ______________________________________________ Identity Document No.: ___________________________ Affiliation Date: _________________________________ Annulment Date: ______________________

Contributed Periods Amount of voluntary contributions made Amount returned 1 2 3 4 5 6 7

Logo AFP

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TECHNICAL STANDARDS FOR THE TRANSFER OF FUNDS DUE TO ANNULMENT OF AFFILIATION CONTRACTS IN THE PENSION SYSTEM

Approval: 12/30/2022 Effective Date: 12/30/2022

NOTIFICATION OF DEFICIENCY AND/OR EXCESS IN THE PAYMENT OF CONTRIBUTIONS WHEN AN AFFILIATION CONTRACT WITH AN AFP BECOMES VOID

Date: __________________ Employer Name: _______________________________________________________________ Address: __________________________________________________ Tel: _______________________ Employee Name: _____________________________________________________________ Affiliation Date: ________________________________ Annulment Date: ______________________

The AFP (Name of the AFP), delivered (date), the amount of US$___________ as a return of mandatory contributions when the affiliation contract No. ___________, in the name of ___________________________, with Identification Document No: ______________________, according to resolution of the Superintendence of the Financial System No. _____________ of date _____________, for the amounts detailed below.

According to the provisions contained in the NSP-58) issued by the Central Bank, through its Committee of Norms, the funds have been transferred in favor of the Pension Institution (ISSS/ISP), respecting the contribution rates that these Institutions had in effect and the profitability generated.

However, the returned funds, in some accrual periods, do not manage to cover the contributions and in others present an excess in the (ISSS/ISP), based on the contribution rates that these receive; therefore, the net value to be paid by the worker or to be returned by the Institute has been established, in order to maintain their level of contributable income, as follows:

Accrual Periods Contributed Days Worked IBC Contribution Rate Amount transferred by the AFP (1)

Contribution calculated in the Institute (2) Difference ( 1 ) - ( 2 ) Excess Value (3) Deficiency Value (4) Totals $ $XXXXX ($XXXXX) Net value to be paid by the worker (3 < 4) $ ($XXXXX) Net Value to Be Returned by the Institute (3 > 4) $XXXXX

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TECHNICAL STANDARDS FOR THE TRANSFER OF FUNDS DUE TO ANNULMENT OF AFFILIATION CONTRACTS IN THE PENSION SYSTEM

Approval: 12/30/2022 Effective Date: 12/30/2022

The net value resulting from the difference between the excesses and the deficiencies in the contribution, when it is negative, corresponds to the worker to make it effective and c