The policy on uprating pensions abroad is a long-standing one of successive post-war Governments. UK State Pensions are payable worldwide, however they are up-rated overseas only where there is a legal requirement to do so.
There are two main reasons for not paying annual up-ratings to non-residents. First, up-ratings are based on levels of earnings growth and price inflation in the UK which have no direct relevance where the pensioner is resident overseas. Second, the cost of up-rating state pensions overseas in countries where we do not currently up-rate would increase immediately by over £0.5 billion per year if all pensions in payment were increased to current UK levels.