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Funding a new generation

Fundisa – launched by the Association of Collective Investments (ACI) in mid-November 2007 – is a key contribution to the financial industry’s efforts to promote access to affordable financial products in accordance with the Financial Sector Charter.

This subsidised account is designed to foster saving for education and is aimed at lower-income groups. It could help to embed the habit of long-term saving by families that set goals and use education as an upliftment tool. With luck, the long-term effect will be to break the cycle of dependency and reliance on social grants. The hope is that this simple, targeted savings product will deliver huge gains for clients, communities, industry and our country.

Savers receive a 25% bonus from government in addition to the money they save. The minimum investment is R40 a month. If savers commit R480 in the year, the account will be topped up to R600 with government’s 25% bonus and so on through the life of the product. Each saver designates a learner whose tertiary education costs will be met, in full or in part, by Fundisa build-up.

Ultimately, capital is channelled to the college or university attended by the learner, as long as the institution is covered by the National Student Financial Aid Scheme.

Any South African citizen can open a Fundisa account for the benefit of any child, but must first have a bank account like Mzanzi, the Standard Bank E-Plan or similar account structured to foster saving by previously unbanked clients. The prospect of educational bonus payments is therefore a further inducement to enter the banking system.

Fundisa savers secure their bonuses by sticking with the savings programme and using the money to assist the designated learner (though the learner-beneficiary might be changed should the initially named child decide against further education).

As South Africa’s largest unit trust company, Stanlib was eager to drive Fundisa forward, identifying obstacles and suggesting solutions.

Synergies with national policy were complemented by synergies within the Standard Bank and Liberty Life groups. To contain distribution costs, it made sense for Stanlib to expand Standard Bank’s national branch network to promote Fundisa and make application forms available.

The Stanlib version of the product is therefore branded “the Standard Bank Fundisa Fund”. Inflows are invested with the banks and a portion goes into government bonds, earning a competitive yield while creating potential for capital growth.

The educational bias echoes the most enduring leitmotif of the Liberty Life corporate social responsibility programme. Since the Liberty Foundation began its work in 1971, educational initiatives for the benefit of disadvantaged communities have been among the largest recipients of assistance.

Since 1990 alone, the foundation has given more than R350-million to programmes that support the state education system. A financial product in support of lower-income families was therefore applauded across the Liberty Life group.

Growth in the investment industry cannot simply be a function of market gains. On occasion, volatility can eradicate growth like that. Sustainable growth has to be underpinned by constant expansion of the customer base.

Anthony Katakuzinos is Stanlib’s director of client services. For further info call the Stanlib contact centre on 0860 123 003

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