Fundisa enters next phase with a record bonus payment of R5.7 million

Following the success of the first phase of the Fundisa unit trust fund, an initiative aimed at encouraging South Africans to save for the higher education of children from low-income families, the second phase launches on Friday, 1 March.

Fundisa is a four-year old public/private sector partnership between the former Department of Education, the National Student Financial Aid Scheme (NSFAS) and the Association for Savings and Investment South Africa (ASISA). Launched at the end of 2007 as a pilot project, the Fundisa Fund was assessed during the course of 2012 and deemed successful by all stakeholders involved.

Leon Campher, CEO of ASISA, says while all stakeholders agreed that Fundisa was worth taking to the next level, it was also decided that the second phase of Fundisa would introduce a means test, which will be applied to the families of beneficiaries.

Campher says the partners to the Fundisa Fund agreed on a means test of an annual household income of R180 000 or less. This means test only applies to the families of the beneficiaries and not to investors. Anyone can therefore still invest on behalf of a child, provided the child comes from a household earning less than R180 000 a year.

“High-income earners are encouraged to invest on behalf of children from low-income families and therefore the means test does not apply to investors. The Fund was also designed to accommodate employers who would like to offer Fundisa as a benefit for employees that fall within the means test.”

During the pilot phase of Fundisa no means test was applied to beneficiaries and the annual bonus payment was allocated irrespective of whether a learner came from a low-income family or not. Bonus payments made during the pilot phase were exclusively funded from ASISA member grants.

Campher says Fundisa was always intended to be an investment vehicle that incentivises investors to invest for the benefit of disadvantaged children. “It simply does not make sense to use the grant money to subsidise the education of children from households that can afford to fund their children’s education.”

He adds that in fairness to those investors who bought Fundisa during the pilot phase where the beneficiaries fall outside the new means test, the annual bonus payments will continue, but from grant money sourced from ASISA members.

“Our assessment of the Fundisa Fund showed that 72% of all existing beneficiaries come from households earning less than R180 000 a year. Their future bonus payments will be funded 50% from the Government grant and 50% from the ASISA member grant. The current 28% of beneficiaries who fall outside the means test will continue to receive future bonus payments from the ASISA member grant.”

Campher also adds that all previous bonus payments will be honoured as long as the beneficiary enrolls at a public tertiary institution when the time comes to enroll for a higher education.

2012 Bonus Payment

Beneficiaries of Fundisa had their benefits boosted by a record bonus payment of R5.7-million in 2012. The annual bonus grant was shared between 20 873 beneficiaries who have 14 383 investors investing towards their tertiary education.

In addition to the annual bonus payment, each beneficiary also benefitted from the 6% average return achieved by the Fundisa Fund for the 12 months to the end of November 2012.

Together with the bonus allocation, this translates to a total return of 31% for 2012 on the first R2 400 invested. While investors can invest more than R2 400 a year, this is the maximum amount that qualifies for the bonus payment, provided no withdrawals are made during the year.

Assets under management in the Fundisa Fund stood at R93.8-million at the end of November last year, an increase of 66.3% over the R56.4-million at the end of November 2011.

How the bonus grant works

As a result of the bonus grant, investors in the Fundisa Fund have the benefits of their chosen beneficiaries enhanced by 25% every year to a maximum of R600 per learner. So if you save R200 each month for 12 months in the Fundisa Fund, you will see the R2 400 investment grow by R600 to R3 000. Furthermore, the R3 000 will also share in the overall investment return achieved by the fund in the next year.

The bonus is not guaranteed, but as long as there is money in the bonus pool the bonus will be allocated annually to the savings for beneficiaries who pass the means test. The bonus is funded from Government and private sector contributions and both the Department of Higher Education and Training and ASISA remain committed to Fundisa.

The following bonus payments were distributed over the past four years:

What is Fundisa?

The Fundisa Fund is a low-risk fixed interest income unit trust fund of funds administered by STANLIB. The underlying portfolios, which in turn 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 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 web site at www.fundisa.org.za