Page last updated at 16:08 GMT, Wednesday, 5 August 2009 17:08 UK

China to roll out rural pensions

Rice farmers in China's Guangxi province
Many of China's rural workers earn far less than urban ones

The Chinese government is to introduce a new pension scheme for the country's hundreds of millions of rural workers.

The minister for social security announced that a trial scheme would be extended across China by October.

The government will pay for basic insurance for rural workers and farmers will contribute to a pension pot.

There is widespread discontent among China's rural poor about the wide disparity between their income compared to that of urban residents.

The government already operates a basic pension plan for urban workers.

Regional variations

"The new system is paid for by farmers, collective benefits and government subsidy, which is totally different from the old system, paid for by farmers themselves, with no subsidy from the government," Hu Xiaoyi said, according to state news agency, Xinhua.

I feel happy that farmers can get a pension now, although it's not that much
Chen Dajin, farmer

The scheme will be valid for all farmers over 60. Anyone over the age of 16 who does not take part in the government's existing urban pension scheme is eligible to pay into the programme.

A pilot version of the scheme is currently being trialled across some parts of China, including in Tangwei country, in Suzhou.

"I feel happy that farmers can get a pension now, although it's not that much," 63-year-old Chen Dajin, from the area, told Xinhua.

The payment will vary regionally and be based on average local income.

He and his wife receive 300 yuan ($43) in pension payments each month.

On Tuesday, the government said it would seek to stimulate domestic demand.

Authorities have been attempting to improve both pensions and medical insurance, in a bid to encourage farmers and poorer urban workers to spend a larger proportion of their income.

According to figures released on Tuesday, although the country's jobless rate remains unchanged, some three million graduates have not yet found work.

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