How can we optimize institutional design to provide more security for their later years?

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This year’s National People’s Congress and Chinese People’s Political Consultative Conference have focused on the hot topic of “how much and how to increase farmers’ pensions,” reflecting a strong expectation to address the shortcomings of the urban and rural residents’ pension insurance system. Experts suggest improving the system design of urban and rural residents’ pension insurance, accelerating the development of a comprehensive, multi-layered, and sustainable social security system, and exploring differentiated increase paths based on categories, layers, and age groups.

During this year’s two sessions, the topic of rural pensions continued to gain attention, with many deputies and members offering suggestions on how to ensure that farmers can age with dignity.

The “14th Five-Year Plan” clearly states the goal to “improve the urban and rural elderly care service network,” and the government work report lists “greater efforts to ensure and improve people’s livelihoods” as one of the main development goals for 2026. It also proposes to increase the minimum monthly basic pension for urban and rural residents by another 20 yuan. These policy signals respond to the expectations of hundreds of millions of rural elderly and reflect the increasingly urgent reality of rural pension issues.

Data from the seventh national population census depict a severe aging trend in rural areas: approximately 121 million people aged 60 and above live in rural areas, accounting for 23.81% of the rural population. The proportion of elderly aged 60 and 65 and above in rural areas is higher than in urban areas by 7.99 and 6.61 percentage points, respectively.

How should farmers’ pensions increase? By how much? Where will the money come from? How to fill the gaps to ensure the happiness of rural elders in their later years? Journalists interviewed several social security experts.

Pension Disparities

“An acre of land yields only a few hundred yuan net annually, plus over 100 yuan in farmers’ pensions each month, which is not enough to cover oil, salt, water, electricity, and medical expenses,” said Lei Maoduan, secretary of the Communist Party branch of Gou Dong Village, Sanyu Li Town, Yuncheng City, Shanxi Province, and a deputy to the National People’s Congress. His research found that rural elders generally face the “Three Not Dare”: not daring to spend, not daring to see a doctor, and not daring to rest.

The “farmers’ pensions” Lei mentioned originate from the urban and rural residents’ pension insurance system.

In 2009, a pilot program for new rural social pension insurance was launched nationwide, giving farmers their first pension after age 60. In 2014, the “New Rural Pension” merged with urban residents’ pension insurance to form a unified system for urban and rural residents. As of 2024, about 540 million people participate, with roughly 180 million receiving benefits, over 70% of whom are farmers.

Jin Weigang, vice president of the China Social Security Society and deputy director of the National Institute of Institutional Research at Zhejiang University, explained that the urban and rural residents’ pension insurance includes two parts: basic pension and individual account pension. The basic pension is jointly funded by central and local governments, with the central government setting the minimum standard, and local governments can raise it appropriately. The individual account depends on personal contributions, collective subsidies, and local government subsidies, with participants choosing their contribution levels; the more they contribute, the more government subsidies they receive.

For example, in the major agricultural province of Henan, the annual personal contribution for urban and rural residents’ pension insurance ranges from 200 to 5,000 yuan across 15 tiers, with government subsidies ranging from 30 to 340 yuan.

However, most farmers tend to choose the lowest contribution tier, resulting in insufficient accumulation in individual accounts. In November 2024, the Legislative Inspection Team of the Standing Committee of the National People’s Congress disclosed in the “Report on the Implementation of the Social Insurance Law of the People’s Republic of China” that about 80% of villagers opt for the minimum contribution tier.

“Low contribution levels mean that most of farmers’ retirement income still relies on the basic pension paid by the government, further lowering overall benefits,” said Fang Lianquan, secretary-general of the World Social Security Research Center at the Chinese Academy of Social Sciences.

After the minimum standard of the basic pension for urban and rural residents increased by 20 yuan to 163 yuan per month in 2024, data show that the average monthly pension for farmers is about 240 yuan, only about 12% of the per capita disposable income in rural areas and 40% of the rural minimum living standard.

Differentiated Increase by Category, Layer, and Age Group

During this year’s two sessions, deputies and members focused on “how to make farmers’ pensions grow faster,” proposing that the “expected” increase of farmers’ basic pensions range from 300 to 1,000 yuan.

It should be noted that in recent years, the frequency and scale of adjustments to the basic pension for urban and rural residents have been increasing.

Fang Lianquan analyzed that from 2009 to 2023, over 14 years, the minimum standard of the basic pension increased by only 48 yuan, but from 2024 to 2026, it has increased by 20 yuan annually for three consecutive years, “indicating that the country’s attention and investment in farmers’ pensions are continuously rising.”

So, how much should farmers’ pensions increase?

Jin Weigang believes the goal should be “to keep the basic pension higher than the rural minimum living standard,” by significantly raising the minimum standard annually and increasing the minimum contribution tier, gradually reaching the growth target.

Fang Lianquan suggests that the increase in farmers’ pensions should be linked to farmers’ disposable income growth and price changes, establishing a normalized adjustment mechanism.

In this major discussion, adjusting the basic pension for the very elderly has become urgent.

During the two sessions, Lei Maoduan proposed a “several-year” plan that has garnered much attention. He suggested gradually increasing the basic pension for farmers over 70 years old within three years.

“500 yuan per month can basically cover the daily expenses of rural elders,” Lei explained. This level is gradually approaching some rural minimum living standards.

Zheng Gongcheng, a member of the Standing Committee of the National People’s Congress and president of the China Social Security Society, advised that pensions should be increased in a categorized, layered, and age-specific manner. Using 70 years as a baseline, on top of the general increase in basic pensions, additional “historical contribution pensions” should be provided, with substantial increases for those over 80.

He also explained the “historical contributions” of elderly farmers, such as paying grain taxes, volunteering for railway and road repairs, and infrastructure work, in his 6,000-word proposal.

On March 18, Lei told reporters that the Ministry of Human Resources and Social Security’s Rural Social Insurance Department has already taken note of his suggestions and contacted him.

Where Will the Money for Increasing Farmers’ Pensions Come From?

Jin Weigang stated that transferring some profits from state-owned capital and using land transfer fees are feasible short-term paths to significantly increase farmers’ basic pensions.

Lü Quan, secretary-general of the China Social Security Society and deputy director of the China Social Security Research Center at Renmin University, said that based on international experience, the government should bear a responsibility similar to an “employer” for farmers’ pensions, with increased fiscal input being core, but avoiding excessive fiscal burden.

Improving the Social Security System

Experts emphasized that from the perspective of sustainable pension development, future efforts should focus on optimizing system design to enhance the social insurance attributes and mutual aid functions of the basic pension for urban and rural residents.

“Basically, the urban and rural residents’ pension insurance is a ‘patchwork’ of government-funded welfare pensions and personal accounts, unlike employee basic pension or commercial insurance, lacking fundamental social insurance attributes,” Jin Weigang said. He suggested drawing on the design and operational experience of the urban and rural residents’ basic medical insurance, integrating personal contributions, collective subsidies, and fiscal subsidies into a single fund, simplifying contribution tiers, and linking pension benefits appropriately to contribution levels to motivate higher contributions.

Lü Quan recommended shifting from fixed contributions to proportional contributions based on a certain percentage of per capita disposable income, setting contribution tiers, and adjusting in tandem with residents’ income.

Noticing that by the end of 2025 and early this year, regions like Yunnan, Anhui, and Guizhou announced increases in the maximum contribution tiers for urban and rural residents’ pensions to encourage higher contributions.

With urbanization accelerating, more rural-to-urban migrant workers may join urban employee pension schemes, requiring further system refinements. Fang Lianquan suggested establishing a connection mechanism between urban and rural residents’ pension schemes, merging contribution years, and implementing segmented calculation methods to integrate residents’ pensions with employee pensions over time.

Beyond increasing pension benefits and ensuring that farmers can age comfortably, efforts should also focus on filling gaps in elder care services, medical security, and long-term care insurance coverage.

Lü Quan proposed changing the criteria for institutional elderly care facilities from age and family structure to disability status; promoting bidirectional urban-rural mobility, allowing urban children working and settling in cities to bring rural elderly to urban areas, supported by rural homestead reforms.

Fang Lianquan recommended raising the standards for elderly allowances, combining income growth and increased property income for low-income groups, and strengthening assistance for vulnerable seniors to accelerate the development of a comprehensive, multi-layered, and sustainable social security system.