Question:
I have a retirement annuity that is paid up – can I start to contribute to it again? If not, can you please explain why?
Answer:
Mark,
This typically depends on the rules of the fund and with whom you took out the retirement annuity in the first place. If it was with a life company in the form of a policy, then you cannot resume making payments to that same retirement annuity policy, as it has effectively been closed out. More likely, you would enter into a new retirement annuity with that company, and transfer the balance of your paid-up retirement annuity to the new retirement annuity.
If you took out the retirement annuity with an asset manager (such as 10X), which is not in the form of a policy, then you would probably be able to resume contributing to your existing retirement annuity (rules permitting).
In the event you paid termination fees or penalties on making your first retirement annuity paid-up (effectively upfront costs recovered by the service provider), you now risk paying these same costs again on your new retirement annuity. You should try to minimise or eliminate these costs by engaging directly with the service provider, and ensuring no termination fees are payable if you make the second retirement annuity paid-up. Again, this is possible with some asset manager retirement annuities, but not with a life company retirement annuity (which are only sold through financial intermediaries).
