Fundisa, a tertiary education savings programme launched as a partnership between the government and industry in 2007, is being wound down, the Association for Savings and Investment SA (Asisa) said on Wednesday.
"Following the confirmation as part of the national budget that government will phase in free higher education and training for students with a family income of less than R350,000, there is no longer an incentive for investors to save for the education of children from low-income households," Asisa consulting senior policy adviser Trevor Chandler said in the media release.
Fundisa was launched in 2007 by then education minister Naledi Pandor with a R20m budget for a three-year pilot project.
"Savers will receive up to a quarter of what they save each year as a bonus. For example, if R1,200 is saved a year, the fund will add another R300 to the saved sum," the education ministry said in November 2007.
The commitment of the government and industry to the project appeared to have been half-hearted from the outset. It was poorly marketed, and at the end of the pilot phase, Fundisa was limited to households earning less than R180,000 a year. The 25% bonus was capped at a maximum of R600 per beneficiary.
"The Fundisa education unit trust fund has been closed with immediate effect to new investors," Asisa said on Wednesday.
"While the annual bonus payments were never guaranteed, Asisa has made a commitment to continue funding annual bonus payments for the existing 27,185 beneficiaries from lower-income families, provided investors maintain their contributions to the fund," the statement said.