There has been a cloud over arrangements for state pension increases for UK citizens who have retired abroad, with the annual increase to their pension ensuring that the payments do not lose their spending power.

The state pension is currently uprated each year by the higher of either wage growth, inflation or 2.5 per cent.

Lord Jones of Cheltenham had asked the government whether UK citizens planning to retire to Italy would continue to receive the annual increase in their state pensions if the UK left the EU with no deal.

In her response, Baroness Buscombe, undersecretary of state with the department for work and pensions, said the UK state pension would continue to be payable worldwide following the UK’s department from the UK.

“As the government set out in its policy paper ‘Citizens’ Rights — EU citizens in the UK and UK nationals in the EU’ we want to secure continued reciprocal arrangements covering the uprating of State Pensions in the EU even in the event of a ‘no deal’ exit,” said Baroness Buscombe.

“We will uprate the UK state pension for those living in the EU in 2019-20.”

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