Under the new rules, savers will still be able to put £20,000 a year into tax-free ISAs like they can now, but Cash ISAs will be limited to just £12,000, instead of the full £20k. Those wanting to use the full £20k allowance will have to put the other £8,000 into a Stocks and Shares ISA instead.

The new rules will take effect from April 2027 but will not affect existing deposits. But state pensioners will be allowed to keep the full cash ISA allowance, Ms Reeves said in her speech.

Cash ISAs, which allow savers to put money away and hide it from tax each financial year, have been the subject of scrutiny all year. At one point, rumours suggested the limit could be set as low as £10,000.

Online hubs will be set up, designed “to help people invest” in the UK, Rachel Reeves has said as she set out reforms to the Isa system.

The Chancellor told MPs: “From April 2027, I will reform our Isa system, keeping the full £20,000 allowance while designating £8,000 of it exclusively for investment, with over-65s retaining the full cash allowance.

“And thanks to our changes to financial advice and guidance, banks will be able to guide savers to better choices for their hard-earned money.

“Over 50% of the Isa market – including Hargreaves Lansdown, HSBC, Lloyds, Vanguard and Barclays – have signed up to launch new online hubs to help people invest here in Britain.”

Savers who would usually exceed that amount will need to find alternatives before the change is put in place. Fortunately, stocks and shares generally ‘significantly’ outpace cash.

Laura Suter, Director of Personal Finance at financial firm AJ Bell, said: “Many who would otherwise have stuck that money into a Cash ISA may be looking for alternatives providing lower risk, cash-like returns.

“Recent figures from AJ Bell highlighted that investment returns have significantly outpaced cash since ISAs were launched in 1999, with investors more than tripling their money, while cash savers barely beat inflation.

“However, investing doesn’t have to be full risk, there are lots of lower risk, cash-like alternatives people can invest in through their stocks and shares ISA.”

Ms Suter added that savers looking for alternatives could investigate money market funds, bond fund and UK treasury bills as well as short-dated bonds or a multi-asset fund instead.

She added: “Money market funds have boomed in popularity in recent years and invest in short-term debt like bank deposits, government loans and corporate loans. The managers of these funds will select a mixture of different investments to manage the money on your behalf, aiming to preserve your money while giving a cash-like return.”

Bonds, are basically a loan, except you’re lending your money to governments and companies, instead of you borrowing from them.

In return, you get regular interest payments and the original outlay back at a set point in the future.

Rates have risen in recent years, making them a more attractive prospect.

About short-dated bonds, she said: “Investors don’t have to buy a fund, they can invest in bonds themselves. For example, in recent years we’ve seen an uptick in the number of investors buying gilts (UK government bonds). Short-dated bonds are bonds that will mature (so repay the investor) in a short time, usually under two to three years. Because they are short-term, they are less sensitive to interest rate changes.”

She added: “Treasury Bills (or T-bills) are short-term loans to the UK government. When you buy one, you’re effectively lending money to the government for a few months – typically one, three or six months. Rather than paying interest, they’re sold at a discount and repaid at face value. So, if you buy a £1,000 T-bill for £980, you’ll receive £1,000 when it matures, with the £20 difference being your return.”

Finally, multi-asset funds are basically an instant, diversified portfolio of investments.

Most private pensions are effectively this already; a portfolio of different options with different risk levels, or different growth targets over a set timeframe.