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Fundisa education fund awards bonus of R5.4 million in 2015

21 April 2016 Leon Campher, ASISA
Leon Campher, CEO of ASISA.

Leon Campher, CEO of ASISA.

The Fundisa education unit trust fund distributed a bonus payment of R5.4 million in 2015 to boost the higher-education savings of more than 26 000 beneficiaries from lower-income families by 25%.

Fundisa is a public/private partnership between the Department of Higher Education and Training, the National Student Financial Aid Scheme (NSFAS) and the Association for Savings and Investment South Africa (ASISA). Launched in 2007, the initiative aims to incentivise South Africans to save for the tertiary education of learners from lower-income families. 

Leon Campher, CEO of ASISA, notes that the bonus allocation has decreased over the past two years as a result of some investors withdrawing their investments for purposes other than funding a beneficiary’s education. Such a withdrawal would result in all previous bonus payments being clawed back.

Since the Fundisa bonus is intended as an incentive to reward investors for saving for higher education, the bonus payment is forfeited when the investment is used for purposes other than education.

Campher says withdrawals are not surprising as many South Africans are facing increasing financial difficulty.

Despite these withdrawals, the fund saw overall growth both in terms of assets under management and in the number of investors in 2015.

Campher says the disparity between the growing number of investors and assets under management on the one hand and the decreasing bonus payments on the other is further due to a number of investors contributing significantly more than the maximum annual R2 400 investment amount that will qualify for a bonus payment. At the same time there are also investors who only pay the monthly minimum of R40, which attracts a much lower bonus payment.

Campher notes the encouraging growth in Fundisa’s assets under management from nearly R181 million at the end of December 2014 to almost R214.5 million as at 31 December 2015. The number of investors saving on behalf of 26 549 beneficiaries also increased from 19 558 to 21 992 in the same 12-month period.

“We are pleased that despite the difficult economic conditions experienced in 2015, the number of investors saving for children’s higher education continued to grow,” he says.

The fund applies a means test of an annual household income of R180 000 or less to the families of the beneficiaries, ensuring that Fundisa only supports the needs of children from lower-income families. This test is applied to the family of beneficiaries and not investors to encourage high-income earners to invest on behalf of children from lower-income families.

2015 benefits

Created as a low-risk investment, the Fundisa fund is an interest-bearing short-term unit trust fund of funds. In addition to the R5.4 million bonus allocation, each beneficiary of the fund therefore also benefitted from the average return achieved by the fund for the year to the end of December 2015.

Campher states that in addition to sharing in the overall return achieved by the fund, investments in the fund are enhanced by up to 25% each year to a maximum of R600 per beneficiary.

Bonus payments are not guaranteed, but Campher says that as long as there are enough funds, the bonus will be allocated annually to beneficiaries that pass the fund’s means test. Bonus contributions are funded by the Government and ASISA members.

The following bonus payments have been distributed since the launch of Fundisa:

How the Fundisa Fund works

The Fundisa Fund is administered by STANLIB. The underlying portfolios, which invest in bonds, fixed deposits and other interest earning securities, are managed by selected asset managers.

The Fund is open to investors wanting to save for the higher education at a public institution of a South African citizen or permanent resident who comes from a household earning R180 000 or less a year. A minimum investment of R40 is required. The investor can then choose to pay R40 or more every month or top up the investment when money becomes available.

An annual fee of no more than 1.25% (excl VAT) applies, which is taken from the return earned on the money invested. Companies offering the Fundisa fund can discount this fee. A maximum initial fee of 3% (excl VAT) may be charged, but only if the investment is made with the help of an independent financial adviser. Fundisa is available from Standard Bank, Nedgroup Investments and ABSA.

More information is available from the Fundisa website at www.fundisa.org.za .

 

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