Several government departments are mulling over a tax break policy for China's commercial pension insurance, a person with knowledge of the matter told China Securities Journal on Wednesday.

A tax deferral program may be introduced during the year, and Shanghai is most likely to be the first city for a trial run.

According the insider, the Ministry of Finance, State Administration of Taxation, China Insurance Regulatory Commission, and Ministry of Human Resources and Social Security are involved in the policy-making. CIRC has already started to develop a product standard for tax-deferred commercial pension insurance products, and the State Administration of Taxation has also prepared to develop a specific program of tax incentives, said China Securities Journal.

If the program is implemented, policyholders would not be required to pay tax for their pension before retirement, the insider said, adding that the move will encourage people to buy commercial pension insurance and participate in enterprise annuity.