ISAs have failed to get their target group saving more, a think-tank claims.
The Institute for Public Policy Research (IPPR) said low-to-middle income earners have failed to take advantage of the Individual Savings Accounts, which were introduced in 1999 to encourage these groups to save.
The IPPR claims that less than a third of families earning less than £600 a week have opened one of the accounts, while it said 44% of those earning less than £200 a week had no savings at all.
It has called for ISAs to be scrapped.
Meanwhile, most of the tax relief offered by ISAs goes to people who would have saved anyway, the report found.
Nick Pearce, IPPR director, said: "Our research shows that people on low-to-middle incomes want simple savings accounts with few terms and conditions, little in the way of small print and paying an easily understandable reward.
"The current tax relief given to higher-income earners could be withdrawn without reducing their propensity to save.
"Instead, these funds could be used to increase saving by low-to-middle income families and boost aggregate saving to improve the UK's saving ratio at no extra cost to the Government."
The think-tank has called for an overhaul of savings, including scrapping ISAs and introducing a new account to boost low-to-middle income earners.
The proposed model - called the Lifetime Bonus Savings Account - would see a "bonus" paid on a sliding scale, with the amount capped once the balance reaches an average of £3,000.