A MetLife study found 34% of savers are looking to ISAs to deliver the majority of guaranteed income in retirement. Even among over-55s more than a quarter (28%) said they were considering using ISAs.

However, the research showed a lack of awareness of available options for ISA savers.

More than two-thirds (66%) reported only saving into cash ISAs and just 10% said they were happy with the rates they receive. More than half of cash ISA savers (55%) were dissatisfied with their rates. Best fixed-rate cash ISAs currently pay around just above inflation.

MetLife’s study found 63% of retirement specialist advisers have changed their recommendations on using ISAs for retirement planning. Around 21% of pension savers said they were making more use of ISAs for retirement planning following pension freedoms.

Simon Massey, wealth management director at MetLife UK, said: “The increase in annual ISA subscription limits from £15,240 to £20,000 in April this year highlights how much can be saved tax-free and makes them a real option for retirement planning.

“But it is worrying that with so much ISA saving focused on cash ISAs that so few savers are happy with the rates they are earning. However, it’s understandable than many are nervous about investing their money in a traditional stocks & shares ISA when markets are uncertain.

“The ISA market attracted more than £58 billion in contributions last year and the rise in contribution levels will provide another boost, but there has to be real choice aside from the higher return but riskier stocks & shares ISAs and the low rates of cash ISAs.”