index-linked

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index-linked

(of an income payment such as a wage, or the value of an asset such as a house), connected to a PRICE INDEX in some predetermined proportion, so that, for example, if the retail price index increases, a wage payment will be automatically adjusted by the same proportion. Indexation is a means of protecting the PURCHASING POWER of an income payment or the value of an asset against erosion by INFLATION.

index-linked

adj. (of a VARIABLE) having a value determined in proportion to a specified index. For example, many pension schemes are linked to the RETAIL PRICE INDEX so that as retail prices increase year by year, pensions increase by the same proportion so as to maintain their value in real terms. See BASE YEAR, INDEXATION, INDEX NUMBER, PRICE INDEX, REAL VALUES.