On December 20th , 2022, the Congress authorized the Built-in Pension Procedure Law (LISP), with the intent to develop a new Pension Program for employees in the private, community and municipal sectors. According to the LISP, the Pension Fund Directors (AFPs) will continue to control the means destined for the payment of advantages (old-age, incapacity and death) to their affiliates in switch, the Superintendence of the Economical Procedure will be liable for the supervision of the aforementioned technique and the regulation will be in demand of the Benchmarks Committee of the Central Reserve Financial institution of El Salvador.
The LISP repeals the Pension Personal savings Program Law of 1996.
The major changes included by the LISP in relation to the Pension Personal savings Process Regulation are as follows:
- With regard to old-age pension, a generalized boost of 30% is established for all pensioners in the method the minimum amount pension should really not be less than US$400 and the most pension really should not exceed US$3,000.
- Retirement age has not been improved (55 several years for women of all ages and 60 many years for guys).
- The contribution amount has elevated to 16%, maintaining the employee’s contribution at 7.25%, and raising the employer’s contribution by one percentage place (8.75%).
- The new distribution of the contribution rate is 9% for the affiliate’s unique account, 6% for the Solidarity Ensure Account and 1% as fee for the AFPs.
- As of the powerful date of the LISP, people today who have made use of the advance of the equilibrium will not be obliged to return it. The boost in their pension will be adjusted in accordance to the pending proportion of the stability as of the day of the pension software.
- Regarding expenditure money instruments of the Pension Fund, the securities issued by the Typical Treasury of El Salvador, the Central Reserve Lender of El Salvador, securities issued by point out enterprises and autonomous official establishments, and Banco de Desarrollo de El Salvador (El Salvador development lender) are eradicated incorporating the Pension Obligation Certificates issued by the Salvadoran Pension Institute. This investment decision is not subject matter to a most investment restrict.
As portion of the new Pension Program, on the identical day the LISP was permitted, the Congress accredited: (i) the Regulation for the Creation of the Salvadoran Pension Institute (ISP) with the goal of guaranteeing the Pension Procedure, getting the ISP who will take in excess of the schools, attributions, legal rights, obligations, assets, liabilities and equity of the INPEP and (ii) the Specific Regulation for the Issuance of Pension Certificates and Dissolution of the Pension Obligations Believe in, which establishes that the ISP will challenge Pension Obligation Certificates (COP) that will be utilised to finance the payments generated or derived from the pension obligations of the Point out, and establishes, among some others, the obligation of the AFPs to obtain, with the assets of the Pension Resources they manage, the totality of the COP of each and every issuance manufactured by the ISP.
The LISP, the Legislation for the Development of the Salvadoran Pension Institute and the Exclusive Regulation for the Issuance of Pension Certificates and Dissolution of the Pension Obligations Belief, will enter into drive 8 times immediately after its publication in the Formal Gazette.