Fundisa bonuses for low-income students

Published Mar 10, 2013

Share

Bonuses paid on money in the Fundisa Fund, which is aimed at encouraging people to save towards higher education, will in future be reserved for students from families with a household income of less than R180 000 a year.

Investors in the fund have been enjoying bonus grants of 25 percent of what they save, to a maximum bonus of R600 a year per student, as long as the money invested in the fund is ultimately paid to an approved educational institution.

Last year, bonus payments of R5.7 million were added to the savings in the fund, for the benefit of 20 873 beneficiaries, who have 14 383 investors investing towards their tertiary education.

The bonuses were paid in addition to the return of six percent the fund earned last year (the year to the end of November), making a total return of 31 percent on the first R2 400 invested in the fund for the year (or R200 a month).

When the fund was launched, the bonus offer was open to anyone saving for a student’s education, but as of March 1, a further condition for the bonus to be paid is that the student must be from a family that earns less than R180 000 a year, or R15 000 a month, and this will be checked by way of a means test.

The means test will be applied only when the investment is first taken out. If the student’s family later exceeds the limit, the bonuses will still be paid.

If you are investing on behalf of a child from a family with an income below the limit, it does not matter if your income is more than R180 000 a year.

Fundisa was started four years ago as a public-private sector partnership between the former Department of Education, the National Student Financial Aid Scheme (NSFAS) and the Association for Savings & Investment SA (Asisa).

The fund is a low-risk fixed- interest income unit trust fund of funds administered by Stanlib. The underlying portfolios, which invest in bonds, fixed deposits and other interest-earning securities, are managed by selected asset managers.

Leon Campher, chief executive of Asisa, says high-income earners are encouraged to invest on behalf of children from low-income families, and therefore the means test will not apply to investors.

“The fund was also designed to accommodate employers who would like to offer Fundisa as a benefit for employees who fall within the means test,” Campher says.

During the initial phase of the Fundisa project, bonus payments were allocated irrespective of whether or not a student came from a low-income family. These bonus payments were exclusively funded by grants from Asisa members. These members include most life assurance and unit trust com-panies. From March, the bonuses paid will be funded by both the government and Asisa members in a 50-50 split.

Bonus payments will continue to be made where the investors bought Fundisa during the initial phase, but the family of the beneficiary or beneficiaries will fall outside the new means test. The grant money for these payments will be sourced from Asisa members.

“Our assessment of the Fundisa Fund shows that 72 percent of existing beneficiaries come from households earning less than R180 000 a year,” Campher says.

Assets under management in the fund stood at R93.8 million at the end of November last year, an increase of 66.3 percent over the R56.4 million at the end of November 2011, an Asisa statement says.

The Fundisa Fund is available from Standard Bank, Nedgroup Investments and Absa.

The minimum investment is R40 and the minimum top-up payment, which can be made regularly or whenever money becomes available, is R40. An annual management fee of no more than 1.25 percent (excluding VAT) applies, and com-panies offering the fund can discount this fee.

The bonus payments are made annually but are only guaranteed if the student starts studying before the age of 35 at a public college or university that works in partnership with the NSFAS.

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

Related Topics: