The SECURE Act 2.0 and Finch's Universal Employment API: A Start-up Opportunity
- Peter Johnson
- Dec 13, 2023
- 3 min read
Victoria Cheng, Partner at Pruven Capital, along with Investor Rohit Ramkumar of the same firm, present their thoughts.
Just one year ago, Congress augmented the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 - the SECURE Act 2.0 - making the retirement system in America even stronger. Bringing in new clauses, this Act facilitates Americans - whether they are close to or distant from retiring - to take advantage of individual retirement accounts (IRAs) and workplace plans in order to save for the future. Some of these alterations have already been implemented this year, whereas others are still to come.
Reflecting on the implications for the FinTech sector, we are thrilled for the chances that startups have to use technology to confront the mounting operational intricacy that these transformations cause, and for companies to formulate cutting-edge offerings in answer to these regulatory modifications.
This section looks at the legal and regulatory conditions that apply to a particular activity.
This section examines the legal and regulatory framework that applies to a specific activity.
Individuals soon to be or already in retirement will be given certain benefits under the Act.
The SECURE Act 2.0 seeks to improve retirement outcomes among younger workers who are still a long way from retirement. Recent reports have shown that 28% of adults have no retirement savings and less than a third of those who aren't retired feel their retirement savings are adequate, a decrease from 40% in 2021 (Report on the Economic Well-Being of U.S. Households in 2022 — May 2023). This legislation includes provisions such as: Group, LLC is an organization that has been in existence for many years.
The Infrastructure Opportunity & Finch Group, LLC has long been in operation.
Given the evolving environment, it is absolutely essential for employers to have a frictionless infrastructure for their employees. Jeremy Zhang and Ansel Parikh of Finch (https://www.tryfinch.com/) have been actively striving to ensure retirement benefits providers are able to onboard sponsors with ease and comply with new regulations such as the SECURE Act 2.0. They have designed a single employment API that obtains privileged data from over 200 payroll and HR systems, as authorized by employers. It enables onboarding into existing plans with organization data, audit of contributions through pay statement details, and direct updating of deductions and contributions into pay runs.
In the past, the employment industry has relied on exchanging data between systems via flat files sent via SFTP or downloaded CSVs and email communications with benefits providers. This cumbersome process required companies to create custom file mapping to make adjustments and analyze the data. Finch has changed this by offering a frictionless platform for reading and managing payroll deductions. The company's ambition to create an interconnected and controllable employment ecosystem has allowed them to grow to servicing 30,000+ employers and 2M+ employees to date.
At PruVen Capital we are looking forward to the multiplying benefit Finch will accrue as they develop the foundational architecture of the system of employment data. This platform enables numerous B2B applications like 401(k) programs, health benefits, compensation management, worker engagement, taxation credits, fiscal and property management, and insurance, not to mention a variety of other services. We are honored to be part of a company that is extending into other data models, clientele, and client services.
Having seen the value of other API platforms such as Plaid, we were convinced of the importance of having comprehensive coverage, exceptional developer experiences, and high reliability for data interoperability. This is particularly relevant in sectors like financial services and HR benefits where the available providers (banks plus payroll/HRIS companies) make use of archaic software systems.
We are thrilled to end this cycle of benefits enrollment to help Jeremy, Ansel, and the Finch team bring the concept of “programmable” benefits to the United States in the upcoming decade.
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