Pension and Parafiscal Management Unit (Unidad de Gestión Pensional y Parafiscales UGPP)


What is the UGPP ?

It is an entity that was created in 2010 and is attached to the Ministry of Finance and Public Credit. It is in charge of overseeing and verifying compliance with the Social Security System regulations and ensuring the recognition of pension rights, as well as managing the public money of the pension funds. Another of its functions is to verify that companies make timely payments of their employees’ social security obligations.

The UGPP is empowered to supervise and audit companies in order to validate the social security contributions made by the company. Through this process the UGPP studies the company’s financial statements, its accounting, its salary exclusion covenants and its compensation schemes. This type of process is also applied to self-employed workers with the capacity to pay.

This entity may request information from both companies and individuals, and they must provide complete and clear information, otherwise they may be sanctioned.

It is also empowered to impose economic sanctions of up to 1,000 legal monthly minimum wages in force. These penalties are imposed when companies fail to enroll their employees in the social security system, when they do not make payments on time, when the company does not provide all the required information and when corrections are made for inconsistencies in payments.

Another process that the UGPP can carry out is the official liquidation. In this process, the company already has a monetary debt with the State (corresponding to the penalty for evading payment of obligations) that it must pay and, if it fails to do so, the entity begins by sending collection notices and subsequently begins to seize assets that are auctioned and, with their value, obtain the money corresponding to the debt.

An appeal for reconsideration may be filed against the official liquidation. This appeal must be filed directly by the taxpayer or by his attorney and must be filed within 2 months following the notification of the initiation of the official liquidation process. This appeal must be addressed to the Directorate of Parafiscales of the Administrative Unit of Pension Management and Parafiscal Contributions of the Social Protection and must clearly explain the reasons for disagreement with the respective process. The document must be submitted with the certificate of existence and representation and, in case it is done through a proxy, a document must be sent that proves that the proxy is a lawyer.

If the reconsideration appeal is unsuccessful, an action for annulment may be filed against the actions of the UGPP, which must be filed within 4 months following the notification of the resolution of the reconsideration appeal.

It is also possible to file a per saltum claim, for which it is not necessary to file a motion for reconsideration, but it is necessary that the contributor has responded in a timely manner to the special requirement. This claim must be filed before the administrative contentious jurisdiction within 4 months following the notification of the initiation of the official liquidation process.


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