The Ghanaian who is currently on loan at Osasuna has made only 10 appearances in all competitions for the German side since joining them
According to Kicker, the 26-year-old defensive midfielder together with two other team-mates, Hoogland and Sergio Escudero, will have their contracts terminated.
The former Accra Hearts of Oak diminutive middleman have had a difficult spell at Schalke since joining them in 2011 from Norwegian side Rosenborg, making just 10 appearances in all competitions.
Annan spent the last two seasons out on loan to Dutch side Vitesse Arnhem and currently at Osasuna where he made only eight appearances in all competitions.
He is valued at 1.5 million Euros.