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China may launch a new social pension system for farmers by the end of this year and the policy is under drawing, said Caijing, a Beijing-based magazine today.

The Chinese government is conducting a feasibility study into the new system, the Caijing said.

Details of the new system, which is based on the findings of pilots, are expected to be submitted to the State Council, China's cabinet, within the year and the pilot program will be launched nationwide, said Zhao Dianguo, an official at the Ministry of Human Resources and Social Security at an industry seminar on Tuesday.

The pilot work for the new system, started in 2003, has covered 305 counties in 23 provinces so far. Three models were created, all featured with definite subsidies from the central and the local governments and new financing and system patterns.

One of the three models won the authority's recognition and was recommended, the Caijing report said. The model combines the personal account and the basic pension directly provided by the government together.

Premiums paid by farmers and subsidies from collectivities and grass roots governments are all collected in the personal account. And the government will directly offer the basic pension when farmers reach pension age. Related officials believed that the model embodied the government's fairness and its risks are easy to control, which is also echoed by the result of the pilot in Beijing.

However, the model requires long-term and increasing input from central and local budgets. As a result, the ministry has to further coordinate with other ministries, such as the Ministry of Finance and the consensus plan will be submitted to the State Council.

The old social pension system for farmers, launched by the Ministry of Civil Affairs in 1992, was based completely on personal accounts. The old pension fund system was mainly afforded by farmers' premium payment and had to support the huge pension management system, costing as much as 3 percent of the fund per year.

Therefore, farmers in 1,484 of the 1,947 pension insured counties received pensions lower than the minimum living standard guarantees for rural residents in 2006. As much as 36 percent or 1.2 million rural pension recipients got less than 10 yuan per month.