The death of the private pension may have begun, a chief executive believes, as figures released this morning suggested wealthy investors have been ‘shunning’ them in favour of equity ISAs.

The research of over 1,000 investors with more than £10,000 in investments from The Share Centre showed one in four (24%) were ditching private pensions in favour of stocks and shares ISAs.

While a quarter were simply replacing their private pension with a stocks and shares ISA, 27% were using ISAs to build up a holiday pot with one in five (21%) planning on using investments to fund school and university fees.

Since the pension freedoms gave retirees the opportunity to access cash tied up in a pension, as opposed to purchasing an annuity, The Share Centre said it has seen an increase of 11% in ISA inflows year on year.

Richard Stone, chief executive of The Share Centre, said: “We may be seeing the beginning of the death of the private pension. The pension freedoms have got investors thinking about the flexibility they want from their long term savings vehicles and the fact that a quarter of wealthy investors are looking at ISAs, and ISAs alone to finance their future speaks volumes about what investors want from their investment products.

“Since pension freedoms came into place, we’ve seen inflows into ISAs increase by more than 11%. So while many media commentators touted that investors would splash their cash on Lamborghinis, it might be that they actually splashing their cash on stocks in their ISAs instead.”

He said: “While the taxable benefits of a pension cannot be argued with, many may now be viewing their workplace pension as the only pension vehicle they need in their life.

“Auto enrolment is now rolling out across the UK and the government has signalled through upcoming changes to the tax system that the ISA will be the preferred vehicle of choice for long term savings.

“These changes include £1,000 of tax free interest income, the £5,000 Dividend Allowance, substantially reduced caps on pension contributions and the lifetime allowance.

“These all mean the main benefit of the ISA is to accumulate a tax free savings pot over time using multiple years’ allowances, in essence, as a long term savings vehicle."