Financial institutions have responded enthusiastically to the Government-sponsored savings scheme announced in the Finance Bill. But most said it was too early to say what kind of product offerings they would come out with and the Irish Bankers' Federation said there would be many questions about the scheme's precise operation.

The Consumers's Association of Ireland said the scheme had the potential to be "the best savings plan on the planet" but warned that consumers needed to be vigilant to avoid high charging products that would drag back performance.

Under the scheme, the Exchequer will top up an individual's monthly savings amount by 25 per cent for a fixed term of five years. The minimum monthly investment is £10 (€12.70), up to a maximum of £200. The scheme will begin on May 1st and accounts must be opened within a year to benefit.

The cash payment by the Government is equivalent to a return of about 9 per cent after tax each year.

Special savings incentive accounts will be managed by a range of institutions such as banks, building societies, credit unions, life assurance companies and fund managers. Savers will have the option of putting money into deposit accounts as well as equity investments.

With deposit accounts, the key question will be whether financial institutions will offer a lower interest rates or higher charges - in addition to the Government's top-up - because of the potentially more costly administrative burden involved. The banks and building societies have a little time to mull this over but competition and consumer awareness should ensure they produce attractive packages for the scheme.

The existing Bank of Ireland and AIB regular savings accounts offer 4.25 per cent and 4.3 per cent respectively. Both banks say they are examining the scheme closely to determine what they can offer customers.

An Ulster Bank spokesman said the bank would have an attractive product which would be amended to fit this category as soon as the details of the scheme were ironed out.

Northern Rock, the British mortgage bank which offers the best demand deposit rate on the market at 5.25 per cent, does not have a regular savings product available here at present. A spokesman said it would need to look at the scheme in closer detail.

The CAI points out that even with no investment growth over five years there is an inbuilt return well in excess of the current inflation rate in the new scheme.

Mr Brendan Burgess of the consumer personal finance website askaboutmoney.com called on Mr McCreevy to impose standards onto products which qualified for the scheme to protect consumers from high up-front charges.

"People do foolish things when they're focusing solely on tax relief. Consumers need to be very careful not to commit to an inferior product for five years," he said.

On the equity-based investments side, Hibernian said it was looking into designing an investment product specially for it. According to Mr Grant Barrans, it would set a standard for extremely good value "because low charges are essential over a five-year term. This is not a category for front-loaded charges but for level charges spread over the term".

According to the CAI, five years is ample time for equity-based investment. CAI's finance spokesman Mr Eddie Hobbs said consumers should strongly consider using products that tracked local European indices at the lowest possible cost.

"For others who are less comfortable with stock market risk, the key will be the best deposit rate available," Mr Hobbs said.

Irish Life & Permanent said regular premium savings accounts would be adapted to include the new features.

On the life side, the Saver Scope plan which was launched last month should not need too much adjustment to fit into the new scheme. The IL&P spokesman said they company was in the middle of determining the costs of administrative support systems but expected that healthy competition would keep charges down.

Credit unions are traditionally associated with small regular savings and a spokesman for the Irish League of Credit Unions said it would need to examine how the scheme would fit in with the other proposals before the organisation.

Mr McCreevy announced tax relief on three new savings options for credit unions in the December Budget and the league will be looking for the best combination for its members.