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Strong @USSEmployers & @UniversitiesUK support of @kevinwesbroom & John Coulthard's proposed reduction of deficit recovery contributions (DRC) from 5% to 3.5% is essential to the success of Aon's Proposal for contingent contributions. 1/
As I note in tweets 12/-14/ 👇, Aon's case for 1%, rather than 1.5%, stepped increases involves a lowering of the upper bookend rate from 33.7% to 32.2% via reduction of DRCs from 5% to 3.5%. 2/
In the recently submitted 2017 Rule 76.4 valuation, DRCs are 5%. Hence they would remain unchanged under #USS's proposed upper bookend. Aon notes 👇that keeping DRCs at 5% introduces an extra layer of prudence, given that the deficit is now much lower. 3/ 
Aon offers the following illustration 👇of how excessive the prudence of 5% DRCs is when applied to the current 2018 valuation. 4/
Aon notes👇in the blue highlighted passage that their proposed 3.5% DRCs for the 2018 valuation would remain more prudent than #USS's 5% DRCs, as applied to the 2017 valuation. 5/
I would urge USS employers to supplement Aon's case for a lowering of 2018 upper bookend DRCs from 5% to 3.5% by pointing out that such a lowering follows from the logic of #USS's lowering of 2017 DRCs from 6% to 5% in late January. 6/
See this embedded thread👇for an explanation of why such lowering follows from this logic. 7/
As I note in this tweet👇from the embedded thread directly above👆, it was only as the result of employers' strong challenge that #USS was moved to adjust DRCs downward from 6% to 5%. 8/
Since, as I note👇, #USS would be inconsistent if they do not now also adjust 2018 DRCs downward, it is crucial that employers issue a strong call for such lowering. Otherwise, employers will themselves lapse into an inconsistent stance regarding DRCs. 9/
To try to justify keeping DRCs at 5% although the technical provisions (TP) deficit has halved between 17 & 18, #USS might argue that these DRCs are needed to address a DIFFERENT deficit: the 'self-sufficiency deficit', which has remained relatively unchanged between 17 & 18. 10/
But if #USS tries to link DRCs to a 'self-sufficiency deficit', it can be shown that the case for such a link collapses in the light of USS's "large and demonstrable mistake over Test 1" (see this blog👇, which makes this point in a different context). 11/
medium.com/@mikeotsuka/wh…
medium.com/@mikeotsuka/wh…
So #USS will not want to go there. 12/12
