FinFit Launches SafetyNet Platform to Facilitate Emergency, Retirement Savings

Financial wellness service FinFit announced Wednesday the launch of SafetyNet, a new platform designed to provide emergency savings, emergency credit and debt consolidation loans for employees.

According to FinFit, 60% of Americans are living paycheck to paycheck and need a financial safety net. Michael Woodhead, chief commercial officer at FinFit, says in order to be financially healthy, it is key for workers to have emergency savings and access to affordable credit.

“If you are somebody who cannot withstand an emergency financial situation in your life, you get punished by our system with more expensive costs of ,” Woodhead says. “If someone has prime credit and wants a rental home, the only thing they [have] to do is pay a modest security deposit and first month’s rent, but if you don’t have prime credit, you pay first month, last month, plus an exorbitant security deposit. It’s ironic and paradoxical that it’s more expensive to not have money in this country than it is to have money and have access to money.”

He adds that financially healthy people also have some amount of retirement savings or are able to participate in a retirement account.

“We asked ourselves: What can we do [at] FinFit to take a product-forward approach to providing these sort of fundamental tools to the American worker that allow them to ladder their way from financial precarity into financial health and resilience?” Woodhead says.

The SafetyNet platform, which must be offered through an employer, is comprised of three modules: emergency savings, emergency credit and debt consolidation loans.

Employees using FinFit are able to request a loan to pay off any sort of debt, as FinFit works closely with payroll firms. After making that request, FinFit’s new program will offer the employee the opportunity to sign up for an emergency savings account so that when they are done repaying the loan, FinFit will continue their payroll deduction—for example, $100 per pay period—and allocate the funds to a emergency savings account.

Woodhead says once that emergency savings account reaches a predetermined threshold, FinFit will roll over the emergency funds into a Roth individual retirement account to allow the user to save for retirement in an after-tax account.

Alternatively, Woodhead says as a user is paying back a loan, the user could allocate a percentage of that repayment to go into an emergency account.

Beginning this year, plan sponsors are permitted to offer emergency savings benefits under the SECURE 2.0 Act of 2022. This includes offering a “sidecar” emergency savings account tied to a participant’s retirement account and allowing participants to withdraw up to $1,000 per year from their retirement account to pay for an emergency.

In addition, the SafetyNet platform provides access to credit solutions and allows employees to access funds at any time to cover unexpected expenses or make ends meet between paychecks. Because of FinFit’s access to payroll data, Woodhead says the platform is able to provide access to credit to a large number of American workers, allowing FinFit to reduce the cost of credit, based on the volume of participants in FinFit’s pool.

“With a payroll integration, we have basically a way of securing debt that other lenders do not have,” Woodhead says. “For the most vulnerable employees in our population, who have the fewest options to affordable credit, we believe [the lack of access is] fundamentally unfair; it’s a disservice to [American] workers. … Then we go further by having a products-forward approach to driving emergency savings. We must give them an impetus to establish savings so that credit becomes an optional tool, not a requirement, for them in the future.”

The platform also features a toolkit of financial wellness products which benefit from group discounts and increased accessibility, including financial health assessments, unlimited one-on-one financial coaching and financial dashboards to help with budgeting and goal tracking.

Woodhead says employers who work with FinFit will automatically have access to SafetyNet, as it is bundled into FinFit’s platform. However, if an employer does not want to offer certain parts of the SafetyNet solution, FinFit can turn features off at the employer’s request.

Paychex, Pilgrim’s Pride and Prism HR are some of the companies already partnering with FinFit.

FinFit was established in 2008 and currently services more than 500,000 organizations across the U.S.