NPS annuity explained: How it works, current rates, and the best pension options for retirees

Retirees can choose from several income options, each with its own trade-offs. NPS annuities offer 5.5 to 7.5 percent returns, but the corpus stays locked for life and the pension is taxable. Fixed deposits give 5 to 6.5 percent returns with moderate liquidity and taxable interest. Debt mutual funds offer 6 to 8 percent returns with easier access to money, though gains are taxable. The Senior Citizens’ Savings Scheme provides 7.5 to 8.2 percent returns with a five-year lock-in and taxable interest.

Choose a mix of options for income + flexibility.