Giselle Gould, Business Development Director: Fairheads Benefit Services
The cost of educating a child in South Africa effectively doubles every 10 years and, for most families, education costs are the single largest item in their monthly budget. When a breadwinner dies, the surviving spouse or guardian of the children left be
Beneficiary funds are one way of meeting this challenge. Beneficiary funds were set up by the government in 2009 as a savings vehicle to manage the funds of children under 18 whose parent has died. The beneficiary fund invests the money to last so that the child can be supported financially until they have finished school. The trustees of the beneficiary fund deal with the guardian of the child, paying out an income every month to help with living costs and paying out larger amounts for expenses such as school fees or medical costs. When the child turns 18 they can legally have the money in their own name and the beneficiary fund transfers the remaining funds into their bank account.
Recent research by Fairheads Benefit Services shows the important role beneficiary funds are playing in education. Of the total number of ad hoc payments made to guardians of Fairheads’ umbrella fund in 2012, more than 70% were related to education. (Ad hoc payments are those made, on request by guardians, over and above monthly income payments).
How do I use a beneficiary fund?
Beneficiary funds are not open to the general public. They are used specifically for the trustees of retirement funds to pay death benefits into on behalf of minor children whose parent has died. If you are a member of a retirement fund, you should be updating your nomination form every year. You can state on your nomination form that you would like the trustees to consider using a beneficiary fund if you die while you are still working. At the same time you should also state who you would like to be the children’s guardian if you die.
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