The state pension is to rise in line with inflation, Work and Pensions Secretary Andrew Smith has told MPs.
Britons are increasingly worried about their pensions
From April, the pension for a single person will go up by £2.15 a week to £79.60, while couples will receive an extra £3.45 a week.
Mr Smith made the announcement after Chancellor Gordon Brown unveiled his pre-Budget report on Wednesday.
He said there would also be extra help for poorest pensioners and those with savings.
The Pension Credit Guarantee is to rise in line with earnings by more than £3 to £105.45 a week for single pensioners and by over £5 to £160.95 for couples.
Mr Smith said the threshold for the savings element would also rise in line with pensions.
A typical single pensioner on income up to £144 a week would now gain from pensions credit, he said.
An extra 106,000 pensioners received pension credit in November and by the end of that month, more than 2.4 million pensioners were benefiting.
Mr Smith said the troubled application line was working well, with 96% of calls answered within 30 seconds.
To help older people's choices, those in receipt of pension credit would be able to access the full range of employment programmes, he added.
But Conservative shadow minister Nigel Waterson told Commons the country was "in the midst of a severe
"We have the dreadful situation of those pensioners who have lost everything
because their company has gone down and taken their pension fund with it," he said.
He said less than half of those eligible for pension credit had benefited.
"Nor should anyone be surprised by this - we have tried to tell the
government that this system is too complex and involves too much intrusive
means-testing and that many pensioners will be deterred from applying as a
result," he added.