Choosing a model

At the beginning of 2006, Guangdong Province, the economic powerhouse in southern China, began on a trial basis to set up a rural pension insurance system for farmers who lost their land to real estate development. Yangxi County is one of the five counties chosen for a pilot program. The program was launched on November 29, 2006, and almost 100 farmers received pensions. The premiums are shouldered by individuals, villages and local governments, and every participant in this insurance program can get a monthly pension of 200 yuan after the age of 60. However, the benefit is too small to provide a satisfactory life for senior citizens.

"We can only take it slowly, and the participation of the government already marks major progress," said Tao with the China Research Center on Aging.

Another new development is that in some rural areas local governments are encouraging commercial insurers to provide pension insurance for farmers.

"China cannot regard commercial insurance as the pillar model of supporting the elderly in the countryside and commercial insurance can only be a complement at most," asserted Lu. She explained that all commercial insurance schemes are profit-oriented and require the regular payment of premiums, which is quite a burden for the rural poor who do not have a stable income.

Lu believes providing a livelihood for the rural elderly should be the first and foremost duty of the government. Under the current situation, the best arrangement is to adopt a multi-level social security system in the countryside. In China's eastern region, which has a higher economic development level, the premiums should mainly come from personal savings while the minority comes from government subsidies. In this region, commercial insurance can be introduced.

In the poorer central and western regions, a welfare pension insurance model should be adopted that relies mainly on subsidies from the central and local governments. As for poverty-stricken farmers, the country should completely take care of them and cover them under a social welfare network when they get old, she said.

"Every farmer should be informed about all the models they can choose from and the advantages and shortcomings of each model; the government cannot choose for the farmers," Mu Guangzong, a professor at Peking University, told Beijing Review.

"The Chinese Government should learn lessons from industrialized countries in providing subsistence for its rural seniors," said Lu. "The idea of social security for everyone must be set up, which will help to eventually bridge the gap in pension systems between rural and urban senior citizens."