The Association for Savings and Investment SA (Asisa) is closing down the Fundisa education unit trust offering, a public-private partnership aimed at helping low-income households save for their children’s tertiary education.
The Fundisa education unit trust will no longer accept investments from end-September 2022 with the aim of closing the fund down by end-March 2023 subject to meeting regulatory requirements, Asisa said in a statement on Tuesday. The Fundisa fund has been closed to new investors since February 2018 as alternative higher education funding programmes from the government reduced demand for the public-private offering.
Fundisa is a legacy project that was launched in 2007 by the then Association of Collective Investments (ACI) in partnership with the department of higher education and training and the National Student Financial Aid Scheme (NSFAS). When Asisa was formed in October 2008 to replace the ACI, it took over responsibility for Fundisa.
The Fundisa fund applied a household income means test of R180,000 for beneficiaries and permitted minimum investments of only R40, thereby allowing investors to either top up their savings with an equal monthly contribution or as and when money became available.
Launched at a time when funding options for students from low-income households were limited, Fundisa was unique in that investors’ savings could be enhanced by a bonus of up to 25% each year up to a maximum of R600 per beneficiary. The bonus payments, which were funded by grants contributed largely by Asisa members from a dedicated bonus pool, were intended as an incentive to encourage saving for higher education.
However, the bonus was not guaranteed and was dependent on savings being available in the bonus pool. It was also forfeited if the investment was withdrawn for reasons other than to pay for education at a public learning institution. Nevertheless, Asisa says R48m in bonus payments have been made to Fundisa investor accounts since its inception.
The main reason for Fundisa’s closure is that since 2018 NSFAS, which is offered through the higher education department, began phasing in fully subsidised bursaries for disadvantaged students from families with an annual household income of R350,000 or less. In 2018 the Ikusasa Student Financial Aid Programme (ISFAP) also started offering bursaries to students from families with annual incomes of R600,000 or less.
That meant that since 2018, there had been no real incentive for low-income households to save for their children’s education via the Fundisa programme. Asisa said that the 10,963 investors still invested in Fundisa funds were being notified of the fund’s impending closure while the bonus allocation to each qualifying investor would be paid in January 2023.
“Qualifying investors would have received their share of the 2021 bonus allocations of R1.2m last month, and we are giving them eight months’ notice that the Fundisa fund will be closing for new contributions at the end of September 2022, to ensure that no-one is prejudiced,” said Asisa CEO Leon Campher.
“While we cannot force investors to use this money for what it was intended, namely to fund a child’s education, we hope that people will do the right thing.”
Asisa, which was a low risk fund-of-funds offering, is administered by Stanlib and was previously available from Standard Bank, Nedgroup Investments and Absa. Asisa said the companies were exploring various ways for investors to close their Fundisa accounts, which may include withdrawal of funds or switching to other unit trust offerings.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.