Pensioners in receipt of pension credit are to get a welcome boost as the chancellor vowed in his Budget to increase the amount of capital disregard on pension credit from £6,000 to £10,000 from November 2009.

The measure is expected to benefit over half a million pensioners on modest incomes, who will receive an average of £4 per week extra.

In his Budget speech, Alistair Darling said, ‘The fall in interest rates has been a welcome benefit to the economy and millions of homeowners whose mortgage costs have come down.

‘But this has also reduced the amount of interest paid out on savings – and has particularly hit pensioners who rely on this extra money.’

The chancellor also announced plans to ensure that the caring responsibilities for grandparents of working age will count towards their entitlement for the basic state pension.

He said, ‘Increasingly, grandparents play a big role in family life and in looking after their grandchildren.’