A small number of 401(k) plans currently incorporate annuities. Employers who offer retirement plans worry about annuities’ complexity and their cost—and about being sued if the insurer that stands behind the annuity fails to make payments. A 2019 law now protects many employers from legal liability.

BlackRock’s offering is one of the first from a major asset manager since the law passed. Workers at electric utility Tennessee Valley Authority, car parts provider

Advance Auto Parts Inc.

and three other companies will have the new annuity product as the default option in their employee retiree plans. That means collectively around 100,000 U.S. employees with some $7.5 billion in workplace savings stand to eventually get annuities in 401(k)-type plans.

The insurance industry has long promoted annuities as important retirement vehicles; a saver who accumulated stocks and bonds could outlive her assets, but an annuity keeps paying until death. One problem that remains is cost: Since interest rates are very low, annuity buyers have to turn over a lot of cash up front for a relatively small payment, and fees can add up.

BlackRock, which has $9.5 trillion in assets, isn’t an insurance company; the annuities in its plan will be issued initially by insurers Brighthouse Financial Inc. and

Equitable Holdings Inc.

BlackRock says it aims to use its clout to negotiate cheaper group rates.

“We’re sitting between the end-individual and insurance companies, using our aggregation power to face off against the insurance company,” said

Mark McCombe,

BlackRock’s chief client officer.

The annuities will be part of a new series of BlackRock target-date fund offerings. Target-date funds are the default way many Americans save for retirement; U.S. target-date mutual fund assets totaled $1.78 trillion in August, according to Morningstar.

Like other target-date funds, BlackRock’s new product will switch from a more stock-heavy to bond-heavy mix as individuals age. It will also invest over time in a pool of annuity contracts. In addition, savers can also use 30% of their 401(k) balance to purchase their own fixed annuity. They can make this choice between the ages of 59 and 72.

The new series of target-date funds, when offered through institutional accounts, will cost an employee roughly 0.1%, or $10 for every $10,000 managed. When the product starts to invest in group annuity contracts, the person’s fees would rise but be capped at 0.16%, according to BlackRock.

Fixed annuities traditionally charge around 1% of the account value. The average expense ratio for target-date mutual funds is 0.34%, according to Morningstar.

BlackRock, which manages more than $350 billion in target-date assets, says it hopes to create mutual fund versions of the annuity offering in the future. Rival Vanguard Group, a major target-date fund provider, hasn’t put annuities into such funds.

“We do not believe in adding a ‘one-size-fits-all’ annuity allocation,” the world’s No. 2 asset manager said late 2020.

About a decade ago, BlackRock couldn’t get traction for a different retirement product that incorporated annuities. But a decade of ultralow interest rates and the continued decline of traditional pension plans have made outliving savings a bigger risk. More than 40% of households headed by people aged 55 through 70 lack sufficient resources to maintain their living standard in retirement, according to a 2018 Wall Street Journal analysis.

At a 2018 meeting of top executives, BlackRock Chief Executive

Larry Fink

asked the firm to address the looming retirement problem, according to people familiar with the matter. Shortly after, BlackRock launched Project Otto, named for Otto von Bismarck, the German chancellor who created a national pension scheme in 1880s.

Over the years, BlackRock lobbied for legislation that would make companies more comfortable incorporating annuities in 401(k)-type plans.

In 2019, BlackRock approached insurance firms as potential annuity providers for a new retirement product. BlackRock asked that insurers only be paid through the spread between yields they generated by investing the buyers’ money and the monthly payouts they make to annuity holders.

“Some, maybe more than others, understood what we were trying to achieve,” said Anne Ackerley, the head of BlackRock’s retirement group.

BlackRock said that plan participants won’t pay commissions, sales loads or distribution fees for the annuities.

—Leslie Scism contributed to this article.

Write to Dawn Lim at dawn.lim@wsj.com