The Fundisa fund was established in 2007 to incentivise people to save towards tertiary education of children from low-income households.
Getty ImagesThe investment industry representative body is planning to close the education savings account meant to incentivise people to save for tertiary education for needy learners in 2023.
The Association for Savings and Investment South Africa (ASISA) said that the Fundisa education unit trust fund will no longer accept investments from the end of September 2022. The fund has not been taking new investors since February 2018. But there are still 10 963 investors putting money in the fund.
ASISA said the banks that offered the account are exploring alternative options for investors, which may include withdrawing the funds, using them to start a new unit trust investment, or switching to another unit trust portfolio.
A legacy project to fund education for the poor
ASISA – formerly the Association of Collective Investments – established the Fundisa Fund in 2007 in partnership with the Department of Higher Education and Training and the National Student Financial Aid Scheme (NSFAS) to help fund the tertiary education of learners from lower-income families.
The interest-bearing unit trust was administered by STANLIB and available from Standard Bank, Nedgroup Investments and Absa.
In order to ensure that it benefitted children from lower-income families, ASISA capped the household income of people who could save through that unit trust account at R180 000. It also limited the use of Fundisa funds to public universities and colleges.
To incentivise people to save, the Fundisa fund paid bonuses of up to R600 for each child that parents, relatives and employers saved for.
ASISA CEO, Leon Campher, said over the years, Fundisa paid R48 million in bonuses. These bonus payments were made from grant money contributed mainly by ASISA members, which include insurers and investment firms.
Campher said that since NSFAS started offering fully subsidised bursaries for disadvantaged students in 2018, there has not been much incentive to save for tertiary education of children from low-income households. Also, in 2018, the Ikusasa Student Financial Aid Programme (ISFAP) started providing bursaries to students from families with an annual income of R600 000 or less.
That said, NSFAS is currently facing a fair share of problems. Thousands of students didn't receive funding in 2021 .
Meanwhile, Fundisa had over 22 000 investors at one point in 2016. At the end of 2019, 21 000 investors saved on behalf of 25 511 beneficiaries. The fund had R336 million in assets under management then.
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