Pension IHT bond demand among UK financial advisers is building ahead of the government’s planned reform that will bring unused pension funds into estates for inheritance tax purposes from April 2027, according to data published by research platform Defaqto. The figures, drawn from Defaqto’s whole-of-market adviser research platform Engage, show Prudential retaining its position as the most recommended provider in both onshore and international bond categories during the first half of 2026, while Transact climbed to second place in the international bond rankings.
For advisers helping clients with estate planning, the timing matters. The government’s own impact assessment estimates that, of around 213,000 estates with inheritable pension wealth in 2027 to 2028, some 10,500 estates will face an inheritance tax liability where previously they would not, according to GOV.UK. That is a meaningful cohort, and it is precisely the scale of the change that appears to be concentrating minds in the advice community.
How pension IHT bond demand is reshaping the rankings
Defaqto’s Engage platform covers more than 20 onshore bonds from 15 providers and more than 50 international bonds from 10 providers. The data excludes recommendations made by vertically integrated distribution networks, which gives it a degree of independence as a barometer of the broader adviser market. Defaqto says Engage is used by more than 30% of UK advisers.
In the onshore segment, the Prudential Investment Plan remained the most recommended product, although Prudential did cede some of its top-ten recommendation share to Quilter. Aviva held third place overall, though changes to its product range following the closure of its Select Investment Growth and Income Option in 2025 contributed to movements lower in the rankings. Chesnara Life placed two products in the top ten, including the M&G Wealth version of its Investment Bond.
The international bond table saw more movement. The Prudential International Portfolio Bond retained the top position, but Transact’s strong first-half performance pushed it into second, displacing Prudential International’s Investment Bonds and Aberdeen International’s Portfolio Bond for Wrap each down one place. Canada Life International remained well represented, with its Premier Account Alpha and Wealth Preservation Account switching positions. Premiere Europe and Utmost International Evolution also entered the rankings, with recommendation volumes becoming increasingly close below the top five.
Andrew Duthie, insight manager for wealth and protection at Defaqto, pointed directly to the forthcoming change as a potential driver of further shifts. ‘With bonds expected to be one of the products that benefits from changes to IHT in pensions coming in from April 2027, it will be interesting to see if these numbers change as we move into the second half of 2026 as advisers show a renewed interest in both onshore and international bonds,’ he said.
What the IHT reform means for wrapper selection
For clients approaching or already in retirement, the reform changes the calculus around which wrapper to use for surplus pension wealth. Where a self-invested personal pension (SIPP) previously sat outside an estate for IHT purposes, that shelter will no longer apply to unused funds from April 2027. Onshore and international bonds, structured appropriately within an estate plan, may offer alternative routes for tax-efficient wealth transfer for some clients, though suitability will depend on individual circumstances, tax position and time horizon.
It is worth noting the downside risk. Bonds carry costs, including product charges and, in the onshore case, tax on gains within the fund. Liquidity can be restricted compared with a simple ISA or general investment account. For clients who do not ultimately exceed the nil-rate band, rotating assets into a bond wrapper in anticipation of an IHT liability that never materialises could prove unnecessary and costly.
Advisers should also bear in mind that the political landscape around pension taxation has shifted more than once in recent years. Planning around a rule that does not take effect until April 2027 carries some legislative risk, even if current intent seems firm. Prudential‘s dominance of both rankings at the halfway point of 2026 may yet be tested as the deadline draws closer and product development accelerates across the market.
