The American Society of Pension Professionals & Actuariesclaims savings from changes to the tax treatment for retirementplan deferrals are incorrectly calculated, because they're based oninflated forecasts.

With budget proposals eying changes to the tax treatment forworkplace retirement plans, ASPPA took a look at how theseplans would fare in integral deficit reduction plans brought to thetable recently.

The group developed a multi-dimensional chart to examine thedifferences. That chart can be found here.

ASPPA CEO Brian Graff remarked:

“We applaud Congressional attempts to reduce the deficit, liftthe debt ceiling, and balance the budget in a way that secures ournation’s future. However, including retirement savings taxdeferrals in the same category as permanent deductions andexclusions may put American workers retirement security in jeopardyand not reduce the long-term deficit as expected because theproposal relies on inflated numbers.

In reality, traditional retirement savings tax incentives don’teliminate income tax on retirement savings, they defer payment ofincome tax until workers retire and benefits are paid out. The costof the incentives is overstated because most of the deferred taxeswill be paid after the short-term window used in Washington’sbudget scoring. Failure to recognize this bad budget math coulddecimate savings rates where Americans save most—at work. (ASPPATax Expenditure Study—May 2011)

We urge Congress to tread carefully. Raising short-term revenuesby reducing the tax deferral incentives created to provideretirement security for millions of American workers and retireesis not in the long-term interest of American workers or theirchildren.”