The Government is prepared to move to prevent tens of thousands of people from topping up their Special Savings Investment Accounts (SSIAs) between now and Budget day.
The Irish Times has learned that the Minister for Finance, Mr McCreevy, has been advised that moves to restrict the SSIA scheme can be backdated.
This means people increasing their contributions in the expectation of restrictions being announced in the Budget could have the increases disallowed.
No moves are planned to make people reduce the contributions they were paying before last week. People already contributing the maximum €254 a month will be able to continue to do so.
Mr McCreevy is reportedly concerned that many of the State's 1.2 million SSIA investors will boost their accounts before the Budget. Although the maximum is currently €254 per month, the average contribution is estimated at €150.
Any move will upset investors who were relying on a last chance to maximise their benefits from the scheme.
It is understood that the Minister is also considering easing SSIA exit penalties in order to entice people to leave the scheme, thereby taking pressure off the Exchequer.
At present, anyone who withdraws their money from an account before the full five-year term faces a 23 per cent penalty on the amount invested and the return.
A spokesman for the Minister said last night: "Advice available to Mr McCreevy suggests if he was to cap the amount that people can invest in SSIAs he could do it retrospectively, thereby limiting exposure from a last-minute rush to plough money in."
The mechanism allowing the Minister to backdate a reduced limit is contained in the Finance Act.
A Department source said that if, for example, a new limit was backdated to November 14th, any money above that amount invested after that day would be refunded.
The source said that while no decision had yet been taken on capping the SSIAs in the Budget, the Minister was edging closer to this move.
Commentators have argued that the scheme is too expensive and have called for it to be scrapped.
However, it is widely accepted now that Mr McCreevy will not scrap the scheme, but will freeze individual investment at existing levels, saving up to €300 million a year in the process.
The SSIA in its current form will cost the State an estimated €500 million a year.
With such tight constraints on Government spending, reigning in SSIAs is seen as a feasible method for the Exchequer to save money.
A Department of Finance source said if all of the 1.2 million investors were to top up to the maximum amount in the next few weeks, the cost to the Exchequer could be in the region of €900 million a year.
Banks yesterday reported an increase in the amount of money customers were putting into their SSIAs.
Financial institutions were bracing themselves for a deluge from savers trying to beat the predicted Budget-day freeze.
Both Allied Irish Banks and Bank of Ireland said customers had been topping up their contributions, while AIB was advising its depositors to step up their payments ahead of the predicted amendment to the scheme.
The Fine Gael leader, Mr Enda Kenny, has called on Mr McCreevy to suspend further contributions to SSIAs.
He has also called for the penalty exit clause to be removed, to make it easier for people to leave the scheme if they need cash quickly.
Yesterday the Taoiseach, Mr Ahern, voiced his support for the continuation of the scheme. He said it was taking the heat out of the economy by encouraging people to save. "Some people argue that we have to take some heat out of the economy because you'd get a more realistic position on inflation and wage demands and on other issues," he said.
"Money in the savings schemes - which is very good for the economy - is doing precisely that."
The publication of the Estimates last Thursday revealed that there was no contingency allocation for any increased level of investment by account holders.