The new scheme is requiring government and public institution employees to hand over 8-percent of their monthly salaries to their pension.
Their employers have to add 20-percent of an employee's monthly salary into the pot.
The changes affect around 40 million people working in Chinese government agencies and public institutions.
Jin Weigang with the Ministry of Human Resources and Social Security says the changes are meant to make pubic-sector pensions more equitable with private ones.
"Currently, we have different mechanisms for the pension system, so there exist differences in treatments, especially in government agencies. Their employees don't have to pay for the pension, but they enjoy a relatively higher treatment than enterprise employees. The reform could settle the disputes of equality on this matter."
Right now, most government employees don't have to make any contributions to their pensions, while corporate employees have to foot at least part of their own bill.
However, government employees are still going to be able to get between 80 to 90 percent of their monthly salary after they retire. The average retirement package for a private-sector employee ranges between 30 and 60-percent.
Yang Yansui, director of the Social Insurance Center at Tsinghua University, says the new changes to the pension system aren't likely to be the last.
"How to unify the dual pension system remains the biggest challenge. The current changes offer us a new perspective, as it emphasis the idea that 'the more you pay, the more you will gain after retirement'. At the same time, the new regulations link pensions with retirement age and average life expectancy. As such, it lays a foundation for the government to take further steps in the future."
Alongside the regular pension, government employees are also going to be required to put 4-percent of their annual salary into a supplementary fund. Employers will have to pay 8-percent.
Chu Fulin is with the Social Insurance Center at the Central University of Finance and Economics says the additional money is going to be invested in the markets.
"The new system separates the responsibilities between the government and the market, and underlines equality and efficiency. The regular pension insurance you pay monthly will be managed and secured by the government. The supplementary fund will be market-driven. This should help reduce obstacles for the government when it wants to make further changes to the pension system."
The new scheme is being made retroactive to October 1st of this past year.
For CRI, I am Wang Mengzhen.
