What are the consequences of canceling my retirement annuity?

This question is based on a common misconception. You can't actually "cancel" a retirement annuity (RA). Here's what you need to know:

Stopping contributions:

You can choose to stop making contributions to your RA at any time. This is often referred to as making the RA "paid-up."

Fund status:

Even if you stop contributing, your existing funds remain invested and continue to grow based on market performance.

Access to funds:

As of September 1, 2024, with the introduction of the two-pot system:

• Retirement component (2/3 of contributions): This remains inaccessible until retirement age (earliest 55).
• Savings component (1/3 of contributions): You can access this once per tax year, subject to certain conditions and fees.

Calculating your accessible savings:

To understand how much you might be able to access from your savings component, use our two-pot calculator.

Tax implications:

Remember, any withdrawals from the savings component will be taxed at your marginal income tax rate and incur an administration fee.

Long-term impact:

Stopping contributions or making early withdrawals can significantly reduce your retirement savings. Consider this carefully and explore alternatives if you're facing financial difficulties.