George Osborne is widely tipped to be introducing a flat-rate of pensions tax relief at next month’s Budget.

Only 20% will continue pension savings at same level after a cut, a poll of more than 2,000 savers carried out by True Potential Investor indicated.

A third of savers asked by the online investment site said they would switch their contributions to an ISA.

Others said they would choose alternative investments, including property.

An announcement ending the 40 and 45 per cent pension tax relief rates has been predicted since Mr Osborne launched a review into tax relief last year.

Twice as many over 55s would favour an ISA versus a pension after a tax relief cut.

Of those aged 18-24 who have been starting to save, 43% would put more into an ISA versus 32% who would stick with a pension.

David Harrison, managing partner at True Potential, said: “Pensions are deeply unpopular, poorly understood and deny people access to their own money for decades. The only reason for choosing a pension is tax relief, which if cut, would dramatically reduce the appeal.

“ISAs are far more simple and popular but to be a viable alternative to a pension, the Chancellor would need to increase the annual allowance to at least £25,000 and provide an incentivising top-up on individuals’ contributions. If he wants to get rid of pension tax relief he needs to turbo-charge ISAs in this way.

“A flat rate of tax relief without enhancing ISAs is a watered down compromise that could actually make the Savings Gap worse and save far less for the Treasury than it wanted.”

The change would be misguided and “devoid of any economic rationale”, the Institute of Economic Affairs has claimed.

Mr Osborne has said he will not formally respond until the March Budget about a consultation on the current pensions tax relief system.