Chancellor George Osborne has been accused of giving to pensioners with one hand and "taking with the other" by Age UK. 

In his budget announcement last week (March 21st), Mr Osborne confirmed the "largest" cash increase in the history of the state pension, with retirees set to receive 5.2 per cent more a week.

From April, single pensioners will see their weekly payments increase by £5.30 to £107.45 each, while pensions for couples will rise by £8.50 to £171.85 per week as the government looks to negate the impact of high inflation levels.

However, despite the government announcing that the 'guaranteed' pension credit will rise by 3.9 per cent to £142.70 a week for single pensioners and £217.90 a week for couples, many are due to miss out on the additional 'savings' credit.

This is due to a rise in the minimum level of income pensioners must receive to be eligible for the credit, with single pensioners required to have £111.10 coming in a week and the threshold for couples rising to £177.20.

Michelle Mitchell, charity director general at Age UK, claimed it is "unfair" that the chancellor is proclaiming record increases to the state pension while low-earners are receiving letters detailing a fall in their means-tested benefits.

She told the Mirror: "The Treasury is giving with one hand and then immediately taking with the other, meaning that these people will not get the full benefit from the rise in the state pension," she said.

"We must not forget either that those pensioners who have a small nest egg are seeing their savings whittled away anyway as interest rates stay way below inflation."

Ms Mitchell added that many older people are now fearful of the future in the current economic climate.

The savings tax credit can be worth up to £20.52 a week for single pensioners and £27.09 a week for those with a partner.