He went on: “In reality there is no surplus in the NI fund because it’s all used to pay contributory benefits. It’s basically a system of public accounting."
The minister said full uprating for all expat retirees would cost around half a billion pounds a year. Partial uprating, he conceded, would cost less - tens, rather than hundreds, of millions.
But he said the figure would compound because “if the policy was changed now, to either full or partial uprating, in 25 or 30 years’ time, the vast majority of pensioners will be receiving amounts of pensions at the levels as if they’d been uprated for the whole time”.
He said there was a danger UK residents would view the government as behaving in a disproportionately favourable way to expats.
He also claimed the decision to move abroad for most people was "a voluntary one". This point was disputed by MPs in favour of scrapping the rule.
Under current rules, retirees residing in the UK, EU and a number of other jurisdictions see their pension increase by the highest of inflation, earnings or 2.5 per cent - the so-called "triple lock".
But all other British expats receive no annual increases.
The government had promised to keep the triple lock in place until 2020 - the date at which the next election was expected to take place.
However, since prime minister Theresa May called the snap election for 8 June this year, the future of the triple lock is no longer clear.
james.fernyhough@ft.com
