Elderly people will see their pensions enhanced again this year and octogenarians are being encouraged to live independent lives at home.

The government will give €300 a year to those over 80 who live independently, an initiative that will cost €3.5 million and will benefit about 12,000 people.

The elderly will again be given the full cost-of-living increase on their pensions.

Combining the €300 grant and the increased pensions, the government calculated that every elderly person over 80 will receive an increase of over €10 a week.

Social benefits will also be upped by the cost-of-living-adjustment amount, meaning 112,000 beneficiaries will get a higher rate.

The changes will also apply to the benefit means test and non-contributory benefits such as the supplementary assistance, the energy benefit and the pink card.

This means pensioners will not lose their sickness benefit despite the raise in pension.

Elderly people and those who are tax exempt and pay 15 per cent withholding tax will start receiving refunds of tax paid without completing a tax form.

No VAT will be charged on private nursing or home help offered by the private sector.

On similar lines, the income tax exemption given to people helping their elderly parents live in private nursing homes will increase by €500 to €2,500.

Service pensions will be extended by a further €200 and widow/er pensions will no longer end after five years from remarriage.

Instead, the five-year limit will be increased by a year, each year, the Finance Minister said.

The government said it would continue refurbishing wards at St Vincent de Paul Residence.

It earmarked land in Birkirkara for the construction of a new residence for the elderly, similar to the one in Mellieħa.