I signed up to Fundisa to save for my kids. Later on it was changed to be for families earning under R180 000 per annum. What do we do now? Are we forced to redeem the savings or can we let them carry on and use them later when the kids go to university?
Reece Morrison - Masthead Financial Planning
The Fundisa Fund account was created in 2007 for parents to save for their children’s higher education.
On March 1 2013 changes with regards to the qualifying criteria to make use of this savings platform were introduced to the Fundisa Fund account and phase two was implemented.
Families or investors wanting to make use of the Fundisa Fund account must now have a combined household income of no more than R180 000 per annum.
It’s worth noting that guardians, and anyone else wanting to save towards a child’s education, may invest on behalf of a learner. However, the investor who wants to provide an education for a child other than their own must [also] have a household income of no more than R180 000 per annum.
If I want to invest for my niece’s higher education (or that of my employee’s child), I will qualify to do so if I earn R180 000 or less per annum.
It is also worth noting that an annual bonus of up to 25% of the funds saved each year will be allocated to the Fundisa Fund account. These funds are only available for the child’s educations costs at the point when the child is required to begin studying. This annual allocation won’t be paid out if the funds are disinvested. Only the investment contributions made during the investment period will be paid out upon disinvestment.
The maximum bonus allocated is capped at R600 per annum, per child.
For example, if you contribute R500 per month for a year, at the end of the 12-month period, 25% of R6 000 is therefore R1 500. However, since the maximum bonus payable is R600 per annum, this is the amount that will be allocated towards the investment within that year and not the R1 500. If you disinvest from the Fundisa Fund account that R600 annual bonus will be forfeited.
It is important to note that all bonuses allocated throughout the investment period, from year one to the end of the investment period will be forfeited if the funds are disinvested or not used for the child’s tertiary educational costs.
If an investor opened a Fundisa Fund account before March 1 2013 the maximum household income of R180 000 per annum won’t apply to that investor. The annual bonus of up to 25% per annum and capped at R600 will also still be applicable, but the learner must attend a public tertiary educational institution when that time comes for the learner to enroll.
Therefore, if you have a Fundisa Fund account opened before March 1 2013, and you earn more than R180 000 per annum, you can continue to make use of this platform to save towards a child’s education. Moving forward however, you won’t be allowed to open another one for an additional child’s tertiary education.