Some time ago I wrote in the column about the education savings plan called Fundisa. I extolled its many virtues because I believe it is a fantastic opportunity. Which is why I was so surprised to see the latest statistics on the Fundisa offering, which shows that not many people are taking up this education savings option.

Some time ago I wrote in the column about the education savings plan called Fundisa. I extolled its many virtues because I believe it is a fantastic opportunity. Which is why I was so surprised to see the latest statistics on the Fundisa offering, which shows that not many people are taking up this education savings option.

I understand that saving is the last thing on most people's minds right now, what with the increase in the general cost of living, inflation, interest rates etc. However, the suppressed economy only highlights further the need for saving.

The Fundisa fund is a savings account that rewards you for saving for education. A bonus is allocated to the account each year, depending on how much was saved. This bonus can be as high as 25percent of the money saved, but is limited to R600 a year for each pupil. This effectively means that R2400 was saved in that year. A higher amount can be saved, but the bonus is still limited to R600.

There are a number of conditions attached to the bonus, namely it can only be used by the pupil whose education you are saving for (or another pupil), and if you need to access the funds or if the pupil does not choose to study further, then the bonus amount is forfeited.

This fantastic concept is open to all South Africans who would like to help educate someone, provided that the pupil is South African. The account holder does not need to be related to the pupil and can sponsor anybody.

The money that is saved is invested in income unit trusts, which in turn invest in government bonds and bank deposits. The interest, income and growth accumulates to the capital amount, as does the bonus amount. Annual statements are sent to the sponsor, showing a breakdown of the investment as well as the bonus paid for.

Once the pupil is ready to study, (has to be before age 35) then the unit trust company will arrange for an award certificate to show the value of the funds available. The pupil then takes the certificate to the college or university and the institution claims the money from Fundisa. This payment is made directly to the public college or university.

The cost involved is an annual fee of 1,25percent which is taken from the income earned in the fund, and the minimum investment a month is R40. The only other costs could be a small commission if one uses the services of a financial advisor, and maybe a debit order fee, depending on the bank where the sponsor's account is held.

Fundisa is a government and unit trust company pilot project aimed at encouraging South Africans to save for education. This is a fantastic opportunity not to be missed.

l Hirsch is a director of Pioneer Financial Planning. Visit www.pioneer.co.za