eGDCGDC reserves policy 2025-2028
The Council establishes a policy to maintain an appropriate level of financial reserves to protect the GDC from a significant event or events which would have a substantial effect, such as a major loss of revenues or a sudden major increase in expenditure.
Reserves are classified as free reserves, reserves committed to fixed assets and pension reserves, as stated in the Annual Report and Accounts of the Council.
However, as our revenue comes mainly from statutory fees, we set the free reserves level having regard to:
- the objectives of Council in pursuit of our statutory and regulatory responsibilities
- funding working capital and management of day-to-day cash flows of the Council, where income is concentrated in summer and winter peaks
- risks to the income and expenditure of the Council
- planned major capital spending programmes
The GDC aims to maintain the free reserves level at a level that is not excessive but does not put solvency at risk. Our policy is to maintain free reserves at a minimum of two and a half months of operating expenditure, as adjusted for our current assessment of financial risk, with a target of four months of operating expenditure by the end of the current strategic planning period.
The Council will review this Reserves Policy at least triennially.
The relationship between reserves and the Annual Retention Fee (ARF)
We use close financial management and scrutiny to ensure that our costs and expenditure are reasonable and not excessive. The relationship between our reserves and the Annual Retention Fee (ARF) is one example of how we do this.
Rigorous financial management enabled us to reduce the ARF significantly in 2020 and, although the ARF increased slightly in 2023, our financial reserves had then grown to an unnecessarily high level. We reduced the ARF in 2024 and then held it at the same level in 2025 by, in effect, returning excess financial reserves to registrants.
In agreeing the Corporate Strategy 2026-2028, Council’s strategic priorities and the funding required to deliver them, this in turn increased the Annual Retention Fee (ARF) for 2026 for dentists and dental care professionals (DCPs). This is necessary to bring income and expenditure back into balance and in line with Council’s reserves policy.
Our plans for 2026-2028 will broadly return the ARF to what it was in 2023, and only slightly above the ARF in 2020. This is significantly lower than if it had increased in line with inflation since then.
We will adjust the ARF as needed from 2027 onwards. Other than in exceptional circumstances, any increase will not exceed the rate of the Consumer Price Index (CPI).
We provide more detail information about our approach to reserves on our Explaining our financial reserves webpage.