Fundisa is an educational savings account that rewards people’s saving efforts with a unique bonus at the end of each year.
The Fundisa website states: “Every year your savings are enhanced by an additional 25% to a maximum of R600 per year. The bonus is added to your savings annually.”
At the end of 2014, Fundisa distributed a total of R6.9 million in bonus payments to 25 000 beneficiaries from lower-income families.
This bonus is generated through a partnership between the National Student Financial Aid Scheme (NSFAS), the Department of Higher Education and Training, and the Association for Savings and Investment South Africa (ASISA).
Beneficiary bonus payments
In a press release, marketing manager at ASISA, Janete Nel, highlighted that “Fundisa’s assets under management grew from R132.4 million in 2013 to R181 million at the end of December 2014.”
At the end of 2014, Fundisa had 19 588 investors who were saving for the education of 25 775 beneficiaries from lower-income households.
In addition to the R6.9 million that was shared between the beneficiaries of Fundisa, ASISA notes, “each beneficiary also benefitted from the 4.6% average return achieved by the Fundisa Fund for the 12 months to the end of December 2014.”
However, Nel stresses that an annual bonus payment is not guaranteed. The bonuses are funded by government and private sector contributions.
Therefore, beneficiaries will only be paid out if there are adequate funds, and only to those beneficiaries who pass the means test.
The means test applies to the families of the beneficiaries of the Fundisa Fund. They have to have an annual household income of R180 000 or less in order to qualify as beneficiaries.
However, the investors who contribute money to the fund do not have to meet this requirement. This is to ensure that “high-income earners can invest on behalf of children from lower-income families.”
Who can apply?
Anyone can apply to the Fundisa Fund, however, the beneficiary of the account needs to be a child who comes from a household that earns less than R180 000 per year.
The purpose of this fund is to provide a platform where investors can “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,” explained ASISA in a press release.
Potential beneficiaries can apply to the Fundisa Fund through Standard Bank, Nedgroup Investments or Absa.
There is also an online application, or simply phone the bank and they will help to establish the account.
For more information on setting up a Fundisa account, click here.
How does it work?
Nel explained: “When Fundisa was created, all parties agreed that this should be a low-risk investment. For this reason Fundisa was launched as an interest bearing short-term unit trust of funds.”
The investors deposit money into the fund for their beneficiary. Once a year, the benefits in the account are enhanced by 25% to a maximum of R600 per beneficiary.
In other words, 25% of the total amount deposited for a child is added to the money that has already been invested for that year, to a maximum of R600.
Although investors can invest in excess of R2 400 per year, Nel points out that “this is the maximum amount that qualifies for the bonus payment, provided no withdrawals are made during the year.”
How much does it cost?
When opening an account through the Fundisa Fund, a minimum investment of R40 is required. The investor who has opened the account then has the choice invest the minimum of R40 or more each month, or they have the option to investment money whenever there is any available.
In addition to the initial investment and the monthly deposit, there is also an annual fee of 1.25% which is taken from the return received on the money that was invested.
If the account is opened with the aid of an independent financial adviser, a maximum initial fee of 3% can be charged.
The bank that you open the account through may charge an additional debit order fee each time you transfer money into the account. However, this will be determined by the bank and its policies.