China's current pension insurance system includes basic pension insurance for urban workers, rural social insurance and urban social insurance.
Under the new plan, those covered by two or three of these types of insurance can switch from one or the other.
Professor Zheng Fengtian with the College of Agriculture and Rural Development at Renmin University says the new policy is part of the broader reform of the social insurance system.
"There should be a unified standard for everyone, no matter who he is. However, the insurance gap between different classes is evident. Yet, to set a unified standard for every different social group costs a lot. So the new scheme is on the right path by starting with people in rural areas, as it paves way for the broader reform of the whole society."
Under the new proposal, people who have paid into social insurance for 15 consecutive years can apply for the basic pension insurance for urban workers, which generates higher returns.
Those who haven't reached the 15-year payment period can apply for the new urban or rural social security plans so they can have basic coverage.
As an example, if a migrant worker from the rural areas has been paying for the new rural social security scheme, he or she can apply to have their payment moved to the better-paying account for urban workers if he or she has moved to urban areas to work.
However, professor Zheng Fengtian notes the 15-year payment requirement is one of the main reasons most migrant workers can't qualify for the most lucrative program.
"Rural migrant workers who are currently working may eventually benefit from the policy. But those who are in their 50's or 60's probably won't. At the same time, the current policy doesn't cover people from rural areas who are living without a job in the city. These are the problems yet to be solved in the new policy. "
Meanwhile, the Chinese Academy of Social Sciences is reporting China's pension deficit has reached some 77-billion yuan through 2011.
Its latest report shows over one-third of China's 31 provinces and autonomous regions are facing pension fund deficits.
The government's top think tank is warning of an unsustainable financial situation under the current pension system.
Li Yang is the Vice president of Chinese Academy of Social Sciences.
"Our basic pension insurance system seems to have saved a large surplus in recent years. And they have guaranteed the current needs. However, most of the surplus comes from financial subsidies by the central and local governments."
The report by CASS also notes China's economic growth structure is undergoing a planned slow-down, which is also going to reduce revenues to the pension system.
Dai Xianglong, chair of the National Social Security Fund, is suggesting part of the gaps in the pension fund can be covered by this country's state-owned enterprises.
"I think we should set up a system to transfer one fifth of SOE profits to social security funds."
China's pension fund only accounts for 2 percent of the total GDP.
The ratio is 83 percent in Norway, 25 percent in Japan and 15 percent in the US.
An aging population here in China is quickly becoming a major concern.
There were 190 million people at or above the age of 60 as of the end of 2011.
It is estimated this figure will top 200 million by 2013.
By 2050, one-third of the Chinese population will be 60 or older.
As many as 125 million elderly people here in China currently receive pensions every month.
As such, Chinese Premier Wen Jiabao has promised to increase government spending on the social insurance system to address the aging problem.
For CRI, I'm Qizhi.