Pension indexation is the adjustment of pension benefits to reflect inflation or cost-of-living changes to preserve purchasing power.

• A. The design of investment asset allocation for pensions.
• B. Adjustment of pension benefits to reflect inflation or cost-of-living changes to preserve purchasing power.
• C. The process of nominating death beneficiaries.
• D. The technique used to consolidate dormant pots.

Answer: (B)

Indexation of pensions is the process of increasing pension benefits to keep pace with inflation, preserving purchasing power for retirees. By tying adjustments to an inflation measure (like the consumer price index), the real value of income is maintained even as prices rise over time. It’s not about choosing investment assets, nominating death beneficiaries, or consolidating dormant pots—those relate to investment strategy, estate planning, and administrative consolidation, respectively.