Technical Standards for Transfer Procedures Between Pension Fund Administrators

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TECHNICAL STANDARDS FOR TRANSFER PROCEDURES BETWEEN PENSION FUND ADMINISTRATORS Approval: 12/30/2022 Validity: 12/30/2022

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

CONSIDERING:

I. That by Legislative Decree No. 614, of December 20, 2022, published in Official Diary No. 241, Volume No. 437, of December 21 of the same year, the Comprehensive Pension System Law was issued.
II. That in accordance with Article 12 of the Comprehensive Pension System Law, affiliates may transfer from one Administrator to another, establishing the conditions under which such transfers will be carried out, as well as the corresponding transfer of resources.
III. That Article 159 of the Comprehensive Pension System Law establishes that the Central Reserve Bank of El Salvador will issue the necessary Technical Standards that allow for the development of what is established in the aforementioned 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 TRANSFER PROCEDURES BETWEEN PENSION FUND ADMINISTRATORS

TITLE I
GENERAL PROVISIONS

SINGLE CHAPTER
OBJECT, SUBJECTS, AND TERMS

Object
Art. 1.- The object of these Standards is to establish the procedures for the transfer of affiliates between Pension Fund Administrators.

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

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TECHNICAL STANDARDS FOR TRANSFER PROCEDURES BETWEEN PENSION FUND ADMINISTRATORS Approval: 12/30/2022 Validity: 12/30/2022

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) Accreditation: Process by which the Pension Fund Administrator carries out the correct crediting and proportional assignment of the affiliate's contribution in their Individual Savings Account for Pensions (CIAP) and in the record of the corresponding Solidarity Guarantee Account (CGS); b) Affiliate: Any person who maintains a relationship with a Pension Fund Administrator through the signing of an affiliation contract. For the purposes of these Standards, regarding the topic of Transfers, it will be understood as Non-Pensioned Affiliate; c) AFP: Pension Fund Administrator; d) Destination AFP: The AFP to which the affiliate wishes to transfer; e) Origin AFP: The AFP in which the affiliate is located at the moment they request the transfer; f) Agent: Pension Services Agent; g) Central Bank: Central Reserve Bank of El Salvador; h) CGS: Solidarity Guarantee Account in accordance with Article 116-A of the Savings for Pensions Law; i) CIAP: Individual Savings Account for Pensions; j) CIAP in liquidation: Temporary status placed on the CIAP of an outgoing affiliate in the Origin AFP, between the day the transfer becomes effective with the Destination AFP and the transfer of the funds corresponding to the CIAP balance; k) Compensation: Process by which the net monetary balances to be transferred between AFPs are determined, for concepts of affiliate transfers. This compensation will be carried out for each Pension Fund in which the affiliate contributed; l) Contract: The document, physical or electronic, that establishes the legal relationship between a natural person and an AFP by affiliation and/or transfer; m) CT: Transfer Certificate or value equivalent to this; n) CUA: Unique Agent Code; o) Days: When used for a term, it shall be understood that it refers to calendar days; p) Identity Document: It may be the Unique Identity Document, Minor's ID Card, Passport, or Resident's ID Card, as applicable; q) DUI: Unique Identity Document; r) HL: Labor History; s) Pension Institutions: Pension Fund Administrator, Salvadoran Social Security Institute, and Salvadoran Pension Institute; t) INPEP: National Institute of Pensions for Public Employees; u) ISSS: Salvadoran Social Security Institute;

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TECHNICAL STANDARDS FOR TRANSFER PROCEDURES BETWEEN PENSION FUND ADMINISTRATORS Approval: 12/30/2022 Validity: 12/30/2022

v) SP Law: Comprehensive Pension System Law; w) Month of transfer confirmation: Month in which the Origin AFP confirms to the Destination AFP that the transfer proceeds; x) Month of transfer effectiveness: Month in which the contractual relationship between the affiliate and the Destination AFP begins; y) INPEP Affiliation Number: Number granted by the National Institute of Pensions for Public Employees to its affiliates, prior to the entry into force of the Law Creating the Salvadoran Pension Institute; z) Backlog: Pension contribution of a worker, paid to an AFP different from the one to which they are or were affiliated. An AFP may be entitled to the commission and another to the contribution, or both, depending on the month the contribution accrued; aa) SP: Pension System; and bb) Superintendence: Superintendence of the Financial System.

TITLE II
ON TRANSFERS BETWEEN PENSION FUND ADMINISTRATORS

CHAPTER I
ON PROCEDURES

Art. 4.- The transfer of an affiliate is generated when they decide to transfer the balance and administration of their CIAP and the information record of the CGS to an AFP different from the one to which they are affiliated at the moment of making the transfer decision.

On transfers between AFPs
Art. 5.- The affiliate may transfer from one AFP to another, in the following cases:
a) When they have made at least twelve monthly contributions in the same AFP; b) When the AFP breaches the affiliation contract, for which the affiliate must file a complaint with the Superintendence, describing the situations that, in their judgment, constitute a breach of contract, attaching pertinent evidence. The Superintendence will issue a resolution notifying the interested party of the decision; if it resolves the complaint favorably, the transfer to the Destination AFP will proceed in accordance with these Standards. After the resolution authorizing the transfer is notified, the affiliate may request it within a term of thirty days, for which they must present, prior to signing the transfer request and contract, the notification from the Superintendence authorizing the transfer. A copy of the notification will be archived with the copy of the transfer request, so that the Destination AFP incorporates it into the affiliate's procedural documentation; or c) In the event of the merger or dissolution of the Origin AFP. (1)

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TECHNICAL STANDARDS FOR TRANSFER PROCEDURES BETWEEN PENSION FUND ADMINISTRATORS Approval: 12/30/2022 Validity: 12/30/2022

Art. 6.- In the case of transfer of survivors' pension beneficiaries, they may transfer between AFPs only when there is a unanimous agreement among the adult beneficiaries. This agreement must be manifested through a letter signed by the adult beneficiaries and authenticated by a Notary, which will be attached to the respective transfer request form. In this letter, one of the beneficiaries or legal representatives will be chosen to handle signing the request form and the contract. If it concerns the spouse or life partner of the deceased with minor children, or if there is only one beneficiary, the letter will not be necessary. Beneficiaries may only transfer when the pension is definitive; that is, they cannot do so while receiving preliminary pensions.

On the transfer
Art. 7.- The transfer of affiliates or beneficiaries will proceed when any of the causes established in Articles 5 or 6 of these Standards are met, as applicable, for which the following must be done:
a) The AFPs will make information available to affiliates or beneficiaries, through their website, at their agencies, or through their pension agents, regarding the transfer process from one AFP to another, and the request form, in which the information required in Annex No. 1 of these Standards must be captured; b) The affiliate or beneficiary must review the request and sign it; c) Upon signing the transfer request, the respective contract, contained in the same form, must also be signed, attaching a copy of the identity document and a copy of the document proving affiliation with the ISSS or INPEP, as applicable. In the case of foreigners residing in the country, a copy of their resident card or passport will be attached, and in the case of minors, a copy of their minor's ID card will be attached; d) In the event that errors are detected in the information contained in the form after the request is presented, the agent must contact the affiliate or beneficiary to correct them, noting this in the observations box; e) No later than three business days after the transfer request is signed, the Destination AFP will transfer to the Origin AFP the information of the affiliates or beneficiaries who signed the transfer request, in accordance with Annex No. 3 of these Standards; f) The Origin AFP must ensure that the information recorded in the electronic file received from the Destination AFP matches that contained in its database. In cases where the information of the affiliate or beneficiary is not concordant, the Origin AFP will have a maximum of fifteen days to achieve the update of the information, a period during which the transfer request will remain suspended until this process is completed;

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TECHNICAL STANDARDS FOR TRANSFER PROCEDURES BETWEEN PENSION FUND ADMINISTRATORS Approval: 12/30/2022 Validity: 12/30/2022

g) If after signing the request and the respective contract and before the transfer of the affiliate becomes effective, the Origin AFP has knowledge that the applicant has died, it must inform the Destination AFP of such situation, and the transfer will be voided; h) If the affiliate or beneficiary withdraws their intention to transfer prior to the transfer becoming effective, they must manifest this in writing with the minimum information detailed in Annex No. 2 and sign such request; i) The Origin AFP must send daily to the Destination AFP, on business days, via electronic files, the detailed information in Annex No. 3 of these Standards, referring to the following: (1)
i. Request for Confirmation of Affiliate Transfer;
ii. Request for Confirmation of Beneficiary Transfer;
iii. Detail of Survivors' Pension Beneficiaries;
iv. Result of the comparison of data contained in the transfer request;
v. Transfer requests deemed inappropriate because the affiliates or beneficiaries do not meet the requirements to transfer;
vi. Detail of affiliates or beneficiaries who filled out the form to cancel the transfer procedure; and
vii. Detail of confirmed transfers, to which the change of information was finalized.
j) The Destination AFP, through its legal representative or the executive designated by the Board of Directors for such purposes, within a term of seven business days, subsequent to the confirmation of the transfer, will sign the contracts of all approved requests, specifying that they will become effective on the first day of the month following the date of the Transfer Request; afterwards, it must deliver copies of the contract to their respective recipients within an additional term of seven business days. In case of more than one employer, it will inform each of them regarding the matter; k) On the date the transfer becomes effective, the Destination AFP will open a CIAP and a CGS record in favor of the affiliate, awaiting receipt of the funds and all information from the contribution records that have been made to the CGS in the name of the aforementioned affiliate, from the Origin AFP; and l) The Destination AFP will have five business days from the date of receiving the information from the Origin AFP to create the affiliate's HL file, including in it a copy of the transfer request and respective contract.

Art. 8.- Other special considerations within the transfer process are the following:
a) If the agent processing the request is under investigation and, by agreement of the AFP's Board of Directors, an accredited agent has been designated, both agents will sign the transfer request form;

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TECHNICAL STANDARDS FOR TRANSFER PROCEDURES BETWEEN PENSION FUND ADMINISTRATORS Approval: 12/30/2022 Validity: 12/30/2022

b) Without prejudice to the obligation to deliver a copy of the contract to the employer(s), the Destination AFP must communicate the confirmation of the transfer to the affiliate by the means agreed upon, whether physical or electronic, detailing the identity document number and name of the affiliate, the date the contract with the AFP becomes effective, the percentage of the contribution base income charged as gross commission or actually charged, and additional information deemed relevant; c) In case of loss of contract copies by any recipient, a copy can be requested from the Destination AFP, in which the word "COPY" must be stamped in uppercase; d) The transfer will take effect from the first day of the month following the date of the Transfer Request, and this will be considered, for all effects, as the first month of accrual in the Destination AFP. From this day, rights and obligations between the affiliate and the Destination AFP will become effective; e) While the rights and obligations with the Destination AFP do not become effective, the Origin AFP will be responsible for the payment of disability and survivors' benefits for common risk; f) Contributions that the Origin AFP or Destination AFP receive erroneously from the employer of unrelated affiliates will be treated as backlogs; g) The Origin AFP must safeguard the Affiliate's file, whether physical or digital copy, and it is its obligation to provide any information about said Affiliate in cases where the Destination AFP requires it; and h) All information that the Origin AFP transfers to the Destination AFP, via document and/or magnetic means, must be sent via a detailed manifest, which must be stamped and signed by the person responsible at the Origin AFP. In the case of electronic transfers, AFPs must establish the method of sending and acknowledgment of receipt.

On the inappropriateness and interruption of the transfer Art. 9.- It is the responsibility of the Origin AFP to verify and consider the causes of inappropriateness of said transfer, according to the following:
a) That the Affiliate is in the process of transferring with another AFP; b) That the Affiliate has filed a complaint to void the contract with the Origin AFP or that the Superintendence declares the aforementioned contract void; c) That the Destination AFP enters the process of dissolution/liquidation or merger; d) That the affiliate does not register at least twelve contributions in the Origin AFP. In this case, the Origin AFP must provide a statement to the affiliate, highlighting the number of contributions registered; (1) e) That the affiliate does not have a balance in their CIAP; f) That the affiliate dies before the transfer becomes effective;

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TECHNICAL STANDARDS FOR TRANSFER PROCEDURES BETWEEN PENSION FUND ADMINISTRATORS Approval: 12/30/2022 Validity: 12/30/2022

g) That the affiliate has initiated the procedure for granting a benefit; and h) That the affiliate has a pending disability qualification request.

On the procedure to void a transfer
Art. 10.- In the event that the transfer is declared void, the Destination AFP will proceed to transfer to the Origin AFP the balance of the affiliate's CIAP, all information from the contribution records made to the CGS in the name of the affiliate, and the HL of the same, with its corresponding documentary, magnetic, or electronic file, or the corresponding documentation, if it is in process; all of this in accordance with the terms and procedures established in these Standards.

Art. 11.- To void a transfer, the Superintendence may act ex officio or at the request of a party, according to the following:
a) Ex Officio: If the Superintendence proves the following:
i. That the signature appearing on the respective form is forged; or
ii. If during the period between the date of approval of the transfer and the date the contract becomes effective, any of the situations contemplated in letters b) and c) of Article 9 of these Standards occur.
b) At Request: When the affiliate, the Origin AFP, or the Destination AFP requests it, or the affiliate files a complaint in writing to the Superintendence, within the term of one year, counted from the confirmation of the transfer.

CHAPTER II
ON TRANSFER REQUEST FORMS AND RESPECTIVE CONTRACT

Art. 12.- The transfer request and respective contract will be contained in a single form, which may be physical or electronic, and must contain as a minimum the elements established in Annex No. 1 of these Standards.

Art. 13.- The forms will have consecutive numbering, and a physical or electronic receipt will be generated for the applicant with the consecutive number of the process, as applicable.

Art. 14.- In the event that the form is filled out by hand, drafts, amendments, strikethroughs, and any other corrections will be noted and validated in the observations box in the presence of the signatories. If it is necessary to correct a form after the date it was signed, the procedure will be as above, and the date of correction will be noted, along with the signatures validating it.

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TECHNICAL STANDARDS FOR TRANSFER PROCEDURES BETWEEN PENSION FUND ADMINISTRATORS Approval: 12/30/2022 Validity: 12/30/2022

Art. 15.- When an affiliate has more than one employer, this situation must be noted in the employer data section and the corresponding spaces for additional employers must be filled out.

Art. 16.- At the moment of signing the form, it must contain three blank fields: the date of transfer confirmation, the signature and seal, when the document is physical, of the person authorized by the AFP to sign the contract, and the date of effectiveness. (1)

Art. 17.- A copy of the identity document presented by the affiliate or by the beneficiaries, as applicable, will be attached to the process.

CHAPTER III
COMPENSATION OF TRANSFERS

On the procedure
Art. 18.- The AFPs, no later than the fifth business day of the month in which the transfer becomes effective, will establish the balance transfer plan to consolidate the transfer of funds for the transfer of affiliates; the AFPs will send the information in accordance with the agreement established between them and according to the detail established in Annex No. 4 of these Standards.

Art. 19.- According to the agreed transfer plan, the Origin AFP will transfer to the Destination AFP the balance of the CIAP registered on the last day of the month prior to the month the transfer becomes effective, as well as the information records of the CGS.

On the fund compensation scheme
Art. 20.- The AFPs may establish a scheme for the compensation of funds in a bilateral manner.
Bilateral compensation will function when there is an agreement between two AFPs to carry out the compensation of funds and will use the basic mechanisms described in these Standards to effect it.
Both AFPs must exchange information on the amounts owed to each other, then they must calculate the compensation independently, subsequently exchanging their respective results. If they agree with the calculations, they must manifest this through the file designed for such effect and then proceed to the transfer of funds; otherwise, they must communicate with each other to analyze and resolve the difference.

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TECHNICAL STANDARDS FOR TRANSFER PROCEDURES BETWEEN PENSION FUND ADMINISTRATORS Approval: 12/30/2022 Validity: 12/30/2022

On the suspension of the process
Art. 21.- In cases where information is not received from the Affiliate within the established terms, the Destination AFP must understand that the process has been suspended and must notify the Superintendence, sending a copy of such notification to the Origin AFP. Without prejudice to what is established in the preceding paragraph, the Origin AFP must notify the Superintendence of the problems that caused the failure to meet the terms, sending a copy of such notification to the Destination AFP. The notifications described in the preceding paragraphs must be made by electronic means. The process must be restarted in accordance with these Standards.

On the CIAP in liquidation
Art. 22.- If the first day of the month is a non-business day, the opening of the CIAP at the Destination AFP and the change in the Origin AFP's system of the CIAP status to account in liquidation, will be carried out on the immediate subsequent business day by both AFPs, without this implying any change in the responsibilities and obligations between the AFP and the affiliates.

On contributions to the CIAP, contributions to the CGS, and accrual periods Art. 23.- The collection of all contributions to the CIAP and contributions to the CGS whose accrual period corresponds to the Origin AFP...