Welcoming the new savings scheme, Mr Martin Nolan of the Irish Association of Investment Managers said institutions would be offering a range of costeffective savings products to the public over the next few months. These could range from equity or managed funds which historically have offered the highest rates of return to a combination of equity and deposit accounts or pure deposit accounts, he said. He advised investors to go for predominantly equity-based products because over the five year time period required they should generate the best returns.

Irish Life & Permanent welcomed the measures. A spokesman said: "We believe the Government's proposals will provide a welcome incentive to potential savers. And while we look forward to hearing further details about how the scheme will operate, we are already commencing work on developing appropriate products to suit the new regime."

The Institute of Chartered Accountants described the scheme as "a radical proposal". If it is successful it will take a lot of heat out of the economy, according to chief executive Mr Brian Walsh.