indexation

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Indexation

The practice of connecting a return on an investment to some index. For example, if the return on a pension is linked to the consumer price index, it is said to be indexed to inflation.

indexation

the automatic adjustment of an INCOME payment (e.g. wages) or a value (for example, household contents’ insurance value) in proportion to changes in a general PRICE INDEX. Indexation is commonly used as a means of countering the effects of persistent price increases (INFLATION). See BASE YEAR, INDEX-LINKED, INDEX NUMBER.