WASHINGTON–A pension professional group is assailing a proposal from the cochairmen of the federal Deficit Reduction Commission to eliminate the tax incentives provided to employers to fund retirement plans.

Brian H. Graff, executive director and CEO the American Society of Pension Professionals & Actuaries (ASPPA), Arlington, Va., said eliminating the tax breaks would “directly impact a worker’s ability to save for retirement” and “ultimately hits low- and moderate-income workers the hardest.”

Graff cited data compiled by the Employee Benefit Research Institute, Washington, which showed only 5% of workers save for retirement on their own, without the benefit of an employer-sponsored plan.

By contrast, 70% of workers earning between $30,000 and $50,000 participate in employer-sponsored retirement plans when they are offered, Graff noted.

Retirement plans such as 401(k) are the primary savings vehicle for most Americans, he added. Eliminating the tax incentives would strip many of them of critically important benefits and protections provided by the Employee Retirement Income Security Act of 1975 (ERISA), Graff said.

“The retirement security of American workers will greatly suffer if the Deficit Reduction Commission’s recommendations are enacted,” he said.

The commission’s draft proposal also calls for fully or partially taxing employer-sponsored health insurance and taxing cafeteria plans. It also suggests uncapping the disability insurance portion of Federal Insurance Contributions Act (FICA) taxes–now 1.8% of FICA.

The panel is also proposing tough targets aimed at curbing the cost of Medicare, reducing corporate income taxes and freezing federal salaries for three years.

The commission’s proposal also calls for allowing greater flexibility in how Social Security benefits are claimed.

It suggests giving retirees the choice of collecting half their benefits early and the other half at a later age to reduce the cost of Social Security. It would also require the Social Security Administration (SSA) to improve information on retirement choices.

The SSA should develop an education campaign to encourage greater personal savings, delayed retirement and phased retirement among Americans, according to the commission’s draft proposal.

The suggestions are included in a draft document developed by the 18-member panel. The commission’s discussions are continuing, and its final report is expected Dec. 1.

It is unclear what final recommendations would be made because only those supported by a supermajority of the group’s 14 members would be included in any final document.