The debate within the government over how to tackle Britain's savings crisis was blown open this week when Alan Johnson, the pensions secretary, signalled support for a revamped basic state pension based on residence rather than contributions.

He also told the Commons there was no plan to continue the controversial means-tested pension credit indefinitely.

Party Response: Liberal Democrat

Steve Webb MP, Liberal Democrat pensions spokesman, said: "The government has called for a debate and I welcome the fact that Alan Johnson has shown a willingness to listen to other parties.

"Finally the government appears to be seeing sense. A citizen's pension would reverse the destruction of the state pension and the relentless spread of mass means testing.

"A citizen's pension would right the injustices of the contributory system, which particularly affect women.

"A citizen's pension is long overdue and the only sensible way forward."

Stakeholder Response: Institute of Directors

Derek Brownlee, pensions executive at the Institute of Directors, said: "Raising the basic state pension to reduce means testing would certainly help remove a strong disincentive to save which exists in the current pension system, thus helping to increase pension saving. However, an increased state pension must be funded from within current spending plans, not from higher taxes, and must be financially sustainable."

Stakeholder Response: Association of Chartered Certified Accountants

John Davies, head of business law with ACCA, said: "What we need is for there to be wide-ranging political agreement on a matter which affects us all. Agreement should first be based on clear principles on which it should be possible to achieve consensus; the basic state pension should be set at an level sufficient to afford a decent retirement income for low earners but the state should not be expected to shoulder an unlimited financial burden and it should be stressed that all who can afford to save via supplementary private pensions should do so

"Fiscal and other incentives need to be given to individuals to save via non-state schemes and to employers to help them do that.

"Individuals need to know that if they save they will be better off than if they do not - this is still not the case and only exacerbates the state's liability.

"Help needs to be given via the tax system to help pension savings to appreciate in value over the course of time and those who save via money purchase schemes should be given freedom to control the withdrawal of their own funds."