Static and Dynamic Targets Example

In the example the same Static Target has been set for each of the 5 Years. An increase in Net Fee Income is planned for each year fro Year 2 to Year 5; expenditure is planned to increase in Year 3, to be maintained at that level in Year 4 and to increase further in Year 5.

The Opening Balance of Reserves is €300 and Reserves increase up to Year 4 but decline back to €300 in Year 5 with the higher level of expenditure.

In the second example Dynamic Targets have been calculated for Years 2 - 5. The same levels of Net Fee Income and Net Direct Expenditure are planned as in the first example.

While different variances are reported from Years 2 - 5, the net position, as measured by the Reserves Closing Balance, is the same each year as in the first example.

It does not matter whether a plan is compared against Static Targets or Dynamic Targets. Dynamic Targets are generally used because they better reflect the Targets that will actually be applied over the 5 years.