You may remember the government announcing pension simplification in it’s A-Day a couple of years back. The intention was to make pensions and items such as SIPPs (self invested personal pension) as easy as possible and pull everything under one regime. Nice thought.

Their latest idea in the budget has served only to complicate matters considerably and call into question whether or not simplification was really the objective. Lets face it pensions are as sexy as a politician and I for one would rather suck a sweet with the wrapper on than delve into excessive reading on the subject.

Remember however, they are an extremely tax efficient way to save. A contribution for a higher rate tax payer allows an immediate uplift of 66% to your pension - the equivalent of your entire life in the building society. Now I know interest rates will not stay at these levels forever, but many people are already coming to terms with the fact that at such appalling levels alternatives have to be sought, and there is considerable evidence that this has already happened and will probably continue. The view on interest rates depends largely on how quickly quantitative easing kicks in. Personally I believe it will take the next twelve months to make its way through but there is already evidence that its had its effect by driving down the yields on Gilts and corporate bonds and effectively driving down the cost of borrowing.

But the gloom merchants are already missing a trick or two. Next week I will look in detail at the commercial property market, with more attention to property shares than the actual asset itself. This column will give you an insight into a potential opportunity. I am reasonably comfortable with the fact that investments in property shares have probably seen their low, and if not they are too close to it to time a quick response when they get there.

I am not as I said talking just yet about the commercial property asset itself as that takes a little longer to bottom out with problems with refinancing etc.

The lag however wont be too far away. And so consider that some of the major commercial property shares have been battered from their highs. Hammerson is down 84% from its high in 2006, British land down a mere 78%. (1) When all else around you are losing your heads some bargains are there to be had. Evidence exists that the cash piles are moving in and this will undoubtedly support this market. More on that detail next week.

And so lets consider the canny investor buying into commercial property or property shares for the time being using their existing pension funds via, for example, a cost effective SIPP.

A SIPPallows you to invest into actual property or indeed property shares if you wish. You may remember for the last four years we have told investors that optimism would not keep their property values up and that has proven more than true. Pessimism will not keep them down.

There is only one characteristic I have found that matches peoples complaints about their poorly performing pension funds and that’s the apathy regarding doing something about it. 'I know its doing badly but where do you go' is the general response with the fear that another bad decision may be just around the corner.

I have not been positive on this asset class for some time but I believe I may be nearing that point now.

For the canny SIPP investor there lies a doubling opportunity. Distressed property assets coupled with the tax relief on your SIPP is a mighty fine cocktail. Because you have already received tax relief on your SIPP / pension you are effectively purchasing property at a 40% or c20% discount (depending on the tax relief you received at the time). Couple this with purchasing distressed assets such as property at such levels and there could well be a nice profit over the next few years. More on this next week.

For advice on whether or not a Sipp is best for you call Peter on 0845 230 9876 or e-mail info@wwfp.net Source: (1) google finance