The Government will provide a higher monthly allowance of $3,435 per person under the Old Age Living Allowance for eligible elderly in more financial need.
It will also relax the asset limits for the allowance.
Delivering his 2017 Policy Address today, Chief Executive CY Leung said 500,000 elderly people will benefit from the two enhancement measures in the first year, with the allowance's coverage increasing to 47%.
Elderly singletons with assets not exceeding $144,000 or elderly couples with assets no higher than $218,000 will receive the allowance at the new rate, which is about one-third higher than the existing rate.
Asset limits for the allowance will be increased to $329,000 for elderly singletons and $499,000 for elderly couples.
Including the other elderly allowances, the social security net will in the first year cover nearly 910,000 or 74% of elderly people.
The eligible age for elderly Comprehensive Social Security Assistance will be raised from 60 to 65 to dovetail with the population policy's direction to extend retirement age.
The Government also proposes to lower the eligibility age for the Elderly Health Care Vouchers from 70 to 65.
An additional 400,000 elderly people will receive $2,000 a year to purchase private primary care services.
The fee waiver for public hospital and clinic services will be extended to cover old age living allowance recipients who are aged 75 or above, and eligible for the proposed new rate, benefiting 140,000 elderly people.
Mr Leung added the Government will also consider issuing larger volumes of Silver Bonds and setting a longer term.
"We will encourage the financial sector to develop more retirement-related investment products," he said.
