DYNAMIZE

transitive verb (Business World) To increase the value of (a pension) by taking inflation into account in the calculations of final salary on which the pension is based; to calculate (final salary) by adding the value of inflation in successive years to a real salary some years before retirement. Such a pension or salary is dynamized; the calculation involved is dynamization. Etymology: The verb to dynamize has been in use in financial contexts with the more general meaning 'make more dynamic or effective' since the seventies. The use in relation to pensions is a specialization of this. History and Usage: The dynamized pension is an approved way of avoiding the Inland Revenue's maximum allowable pension rule (that a pension may not be worth more than two-thirds of final salary) and dates from the late seventies. Norwich Union...cannot dynamise the pension without the trustees' approval. Daily Telegraph 14 Oct. 1989, p. 31