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Monday, March 1, 2010
Government aid

Despite feeling the economic pinch, thousands of parents and sponsors placed the education of future generations high on their priority list in the past year. The Fundisa unit trust fund, an initiative aimed at encouraging South Africans to save for their children’s higher education, attracted over 4 000 new investors over the past 12 months, bringing the number of unit holders to 6 929.

As at the end of October 2009, assets under management in the Fundisa Fund stood at R9.5-million, a whopping 313% increase over the R2.3-million at the end of October 2008. The Fundisa Fund was launched in November 2007 and during the first year 2 743 parents and sponsors signed up.
Janete Nel, marketing manager at the Association for Savings and Investment South Africa (ASISA), says the drastic increase in parents and sponsors making use of the Fundisa Fund to save for a child’s tertiary education is very encouraging.
“At the end of the previous year we were a little disappointed by the uptake of the Fundisa Fund. But the much improved support, despite the economic hardships experienced by the majority of South African, shows that many consider education a priority when it comes to saving.”

Fundisa bonus payment

Fundisa investors received a bonus payment of R1.2-million last year, compared to just R390 000 the previous year. Making this bonus payment even more attractive is the fact that it comes in addition to the 9.5% return achieved by the Fundisa unit trust fund for the 12 months ended October 2009.
Nel says this translates to a total return for the year of 34.5% on a Fundisa investment of R2 400. Only the first R2 400 invested in the Fundisa Fund every year qualifies for the bonus payment.
The Fundisa Fund is a joint initiative by the collective investment schemes (unit trust) industry and the Department of Education. Bonus payments are made from the R31.1million committed by the Government and the collective investment schemes industry to the Fundisa Fund.
As a result of the bonus grant, investors in the Fundisa Fund have their investment enhanced by 25% every year to a maximum of R600 per learner (on the domestic fixed investment product). So if you save R200 each month for 12 months in the Fundisa Fund, you will see the R2 400 saved 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.
However, to ensure that the money saved in the Fundisa Fund is actually used to pay for a child’s education, the bonus payment (or a portion of it) falls away if the investment is withdrawn. The bonus payments received can only ever be used to pay for a child’s education at a Government recognised institution. Investors can, however, withdraw their savings together with the normal returns on the capital at any time.

Copyright © Insurance Times and Investments® Vol:23.3 1st March, 2010
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