Government pensions tsar Lord Adair Turner today held out the prospect of commercial property being included in a new state-run pension scheme

Turner, whose chaired the Pension Commission that has recommended the National Pension Savings Scheme, was addressing the BPF’s annual luncheon at London’s Grosvenor House Hotel.

The Savings Scheme is the Government’s answer to Britain’s anticipated £57bn savings gap, and aims to Channel money from employees and firms to a large selection of bonds, equities, cash and other assets.

Turner said: `Residential property may not be suitable for the scheme, due to the high levels of ownership in Britain, but commercial property represents a good diversifier in a defined pension scheme.

`It’s returns have proven better than bonds, and less volatile than equities.’

BPF President Nick Ritblat said the last 12 months, with strong growth in values, the final go-ahead for REITs and escalation in use of derivatives could represent `the best ever year for UK property.’

However, he said that the industry needs to continue to attempt to modify REITs, saying unlisted and AIM-listed REITs and better vehicles for owner-occupiers are needed.

He also said he is `very disappointed’ that residential REITs are `a slow starter at best’, but that the commercial property world as a whole should start to play a bigger role in satisfying housing shortages.

He also repeated BPF attacks on the Government’s proposed planning gain supplement, saying it will not deliver regeneration.