Putting your own residential property in a Sipp may be inappropriate for many people but Abbey, in association with Knight Frank, has come up with a residential property plan allowing investors with modest pension funds to invest in property with less risk.

Some financial advisers are predicting investors will pour billions of pounds into residential property through their self-invested personal pensions (Sipps) when this becomes possible for the first time next April. However the risk of putting all your money in one property is likely to give the average homeowner considering this choice a disproportionate exposure to this asset class.

The Abbey plan is designed to provide both capital protection and offer investors exposure to the UK residential property market without the risks that come from buying property as an investment.

The Residential Property Plan is structured to pay out twice the rate of growth in the Halifax index over 10 years.

Averaging is used to smooth the performance of the Index and to shelter the investment from any sudden fluctuations. However, if the Index rises continually through the final year, the use of an average could mean the return is less than it might otherwise have been.

While there have been other investment plans linked to house prices, none have offered such a long term or complete capital security, say city experts. Expect other financial groups to come up with imaginative ways to allow property investment on a smaller scale as A-Day - April 6th 2006 - comes ever closer.