Under the current system, when you take money out of your pension or 401K it is taxed as income. Therefore you will not get dollar out for dollar in.
There will be a tax credit for the basic cost living in the Fair Tax.
You will now be taxed on what you spend, not what you invest or gift.
A couple buys a house, raises a family, retires, and decides to downsize. Today, a $500k capital gain from that sale is exempt from tax. With the new unfair tax tax man at the door, that couple has to pay taxes on all that gain throughout retirement.