Once in place, they will transform lives of China's retired agricultural workers, claimed Yang Yansui of the Centre for Employment and Security at the Tsinghua University.

As a new system it will not be included in the social insurance mechanism. To finance the scheme it will be necessary for farmers to pay into a collective fund every month during their working lives. By the time they reach 60 they will have accrued sufficient funds in their individual pension account.

The pension moneys will be managed by professional fund managers who will increase its worth by investing in various markets.

Favorable government policies are paramount to the success of the scheme, which is expected to bring rapid and large increases in the value of these pension funds.

"We appeal for no money from government, but policies," said Yang, who is heading the scheme, which he said should be given "the green light."

For instance, the new pension funds should give the highest priority to investments with high profits, so that when farmers claim their pensions at the age of 60, they will receive higher returns for their deposits, said Yang.

"Further more, government should give direct and firm supervision to the capital operation of pension funds," he said.

The new pension system design program was jointly launched recently by the Centre for Employment and Security Studies at the Tsinghua University and the Department of Rural Social Security under the Ministry of Labor and Social Security.

With a large rural population of 900 million, the question of how best to deal with the provision of pensions for farmers has long been the subject of heated debate and dispute, an unnamed ministry official remarked.

But at least now there is a concerted effort to address the issue.

The new system will be based on the former system of rural social endowment insurance operated by the Ministry of Civil Administration. The old system was ended in 1999, leaving some regions reliant on commercial endowment insurance schemes, some with no pension system and other, more affluent areas, such as the provinces of Guangdong, Fujian and Zhejiang reverting -- very successfully -- to the old system and in the process amassing the tidy sum of 21 billion yuan (US$2.53 billion), according to Yang.

The new system would provide a pension scheme for all regions, whatever their differing circumstances, added Yang. The level of contributions would vary according to the means of those involved.

It is expected that the final recommendations will be submitted to the central government next March, by which time the new term of the central government will have had some time to establish itself.

(China Daily October 15, 2002)