Paper retirement benefits checks and savings bonds soon will become a thing of the past, for federal employees and all other government beneficiaries, under a new e-government initiative announced Monday.

Switching from paper to electronic transactions will save more than $400 million and 12 million pounds of paper during the first five years alone, the Treasury Department said.

The change affects civil service retirement, Social Security, supplemental security income, veterans and railroad retirement beneficiaries. Recipients will receive their benefits either through direct deposit into a bank account or through Treasury's Direct Express debit card. The change will apply to new beneficiaries starting March 1, 2011, and to existing recipients beginning March 1, 2013.

"By moving to all-electronic payments, Treasury will save hundreds of millions of dollars and substantially reduce our environmental impact, making this a win-win for all Americans," Treasury Secretary Tim Geithner said.

Currently, 85 percent of federal benefit recipients receive their payments electronically.

In addition, Treasury will eliminate the option to purchase paper savings bonds through payroll deductions for federal employees beginning Sept. 30 and for private-sector employees by Jan. 1. Future transactions will only be made through Treasury Direct, a Web-based system that allows employees to buy and hold electronic savings bonds.

Paper savings bonds still will be offered for sale at most banks.