Five central departments released a guideline for the implementation of private pension plans on Friday, in an effort to improve the nation's pension system.

The guideline, jointly released by the Ministry of Human Resources and Social Security, the Ministry of Finance and the State Taxation Administration, said individuals joining the private pension plan should first open an account at State-run social security platforms or those operated by commercial banks and then open a capital account at an authorized commercial bank or financial institute.

Those joining the plan are allowed to pay up to 12,000 yuan ($1,650) per year and the payment can be done by month, installment or by year.

According to the guideline, accounts covered by private pension plans are in closed-loop management and the insured can draw the pension by month, installment or at once when they reach the age for receiving pensions - roughly 60 years old for males and 55 for females, or in the event they lose the ability to work or migrate to other countries or regions.

The insured can purchase financial products using the money in private pension accounts at their discretion, but the concerned financial institutes should remind the insured of the risks of these products.

The guideline said tax reductions or other supporting policies will be available to the insured.