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Under #USS's current valuation, a relatively modest 3.7% rise in contributions from 26% to 29.7% might be possible, so long as accompanied by triggers of automatic contribution increases if funding deteriorates during the next 3 years. 1/
Such increases might be triggered by sufficiently large increases in the technical provisions (TP) deficit. In this blue-highlighted passage👇, #USS suggests that, in order to be sufficiently "objective", TP triggers would have to be based on a 'gilts plus' discount rate. 2/ 
Below I argue that an "all yields plus" TP discount rate would be just as objective as, but more accurate than, a gilts plus TP discount rate, where "all yields" includes dividend, rental, & corporate bond yields as well as the gilt yield. 3/
The TP discount rate which #USS sets at each triennial valuation is the expected return on the scheme's assets, prudently downwardly adjusted from a 50% to a 67% chance of achieving that level of returns. 4/
The TP discount rate that is set at the triennial valuation is based on the expected returns of the reference portfolio, which is 62.5% equities, 10% corporate bonds, 25% index-linked gilts, & 7.5% property & other private markets. 5/
According to this👇linked #USS document, the expected returns on each of the above 4 asset classes is based on the relevant yield (dividend, corporate bond, gilt & rental) plus various other factors. 6/
uss.co.uk/~/media/docume…
uss.co.uk/~/media/docume…
A 'gilts plus' discount rate adjusts the expected return on the entire reference portfolio upward or downward on the basis of nothing other than changes in the gilt yield. 7/
It does so even though gilts are only 25% of the reference portfolio & the gilt yield is only one indicator #USS draws on in deriving expected returns on gilts. 8/
It would be an improvement if, rather than basing everything on changes in the gilt yield, #USS adopted an "all yields plus" discount rate to monitor the scheme's funding level between valuations. 9/
An "all yields plus" discount rate would monitor TP funding level based on changes in the weighted average of the yields across ALL 4 main asset classes, weighted by the proportion of assets in each class in the reference portfolio. 10/
Such an "all yields plus" discount rate would be no less "objective" (see 2/ above) than a "gilts plus" discount rate, since based on changes in publicly available indices for the dividend, corporate (& emerging markets) bond & rental yields as well as the gilt yield. 11/
It would also provide a more accurate indicator of expected returns on assets in #USS reference portfolio than a gilts plus discount rate, since based on a weighted average of the relevant yields of the assets in that portfolio. 12/
Moreover, an "all yields plus" discount rate would be a less noisy, volatile indicator of TP funding than a gilts plus discount rate. 13/
Therefore, an "all yields plus" discount rate would be an improvement on a gilts plus discount rate, which #USS would not have good grounds to reject in favour of the latter. 14/14
