The White House last week strongly endorsed annuities  as a needed but missing piece of Americans’ retirement plans. Insurance  companies and annuity trade groups had something nice to say about  Washington regulators for a change. And the new rules just might set in  motion some interesting retirement-plan changes.

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Among  financial products, annuities have long been a very hard sell. It’s  easy to understand the appeal of buying Apple stock or getting in on the  ground floor of Facebook’s IPO. Understanding annuities and their benefits, however, is not on the minds of many investors.

The  premise of an annuity is easy to state: Give some money to an insurance  company and it will make guaranteed payments to you for the rest of  your life. The money can be paid now or in the future. The payments can  begin at any time the investor chooses. And the lifetime stream of  income promised by an annuity can augment Social Security and help put  to rest a person’s fear that he or she will run out of money before they  die.

Insurers have loaded down basic annuities  with so many features, fees, and product types, however, that they’ve  hidden the clear premise of the product. No wonder that many investors  decide it’s not worth their trouble to learn about annuities. That’s too  bad.

Annuities behave like defined-benefit  pension plans. Once they’re in place, they produce regular payments that  recipients can count on. In fact, when someone gets a defined-benefit  pension these days, odds are, their employer’s retirement plan will  generate the monthly payments by turning the assets set aside for their  benefit into an annuity. So, it might be nice to have more retirement  annuities in 401(k)s, IRAs, and other retirement programs.

The set of rules announced last week will support more retirement-plan annuities in four ways:

1.  They will permit splitting retirement distributions into lump-sum  rollovers and annuities. Many employees and even retirement-plan  administrators don’t think about more flexible choices when cashing out  of workplace plans. The new rules encourage so-called “split options”  and simplify the calculation of such split benefits, including  annuities.

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2.  They encourage the use of “longevity annuities.” This is the name given  to an annuity that doesn’t begin making payouts until the person  typically celebrates their 85th birthday. Because the payments are so  far in the future, the current price of such annuities is relatively low  (of course, if you die before you turn 85, you might get nothing for  your annuity purchase.) Longevity annuities are considered a  particularly good tool for women, who outlive men and badly need more  lifetime income protection. The new government rules would encourage  longevity annuities by relaxing the annual required minimum distribution  rules (RMDs) for retirement accounts. RMDs must now be taken from  401(k)s and IRAs when the account holder turns 70½.

3.  For employers who have both defined-benefit pensions and  defined-contribution 401(k) plans, the new rules would allow employees  to use some of their 401(k) assets to buy low-cost annuities in their  employer’s defined-benefit plan.

4. Current  spousal consent rules can block plans from offering longevity annuities  and other deferred annuities where income payments begin at a future  date. The new rules protect spousal rights to benefits but defer the  required consent until the annuity payments actually begin.

Some  of last week’s changes are already in effect. Others took the form of  proposed rules that a Treasury spokesman said would be implemented  before the end of this year. These are executive orders and do not  require congressional approval through legislation.

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Even  with new rules, changing retirement-plan offerings and investor  behavior will take years. For comparison, a set of important 401(k)  changes contained in 2006 pension-reform legislation took several years  to take hold. But it has led to huge gains in retirement plan  participation. It’s also given rise to target date funds—a  class of mutual funds designed to automatically adjust their holdings  to reflect the retirement investment risks of investors of different age  groups.

Another reason retirement annuities  will not be taking off as the next big thing is, sadly, that they aren’t  a very good deal today. To guarantee future annuity payments, insurers  usually place annuity purchase funds into very safe investments—bonds or  other holdings whose returns are tied to prevailing interest rates.

The  Federal Reserve has been keeping interest rates near zero and recently  extended its commitment to this policy through the end of 2014. Such low  rates reduce the size of guaranteed income payments that insurers can  offer to purchasers of traditional retirement annuities.

At the request of U.S. News,  the Insured Retired Institute (IRI) calculated a set of current income  payments on retirement annuities. The IRI, an annuities trade group,  used current interest rates to determine the size of a retiree’s  guaranteed monthly payments that he or she could get in exchange for the  purchase of a $100,000 annuity. The three numbers listed below for each  type of annuity are monthly payments to a 65-year-old man, 65-year-old  woman, and to a 65 year-old couple. Annuity purchasers commonly choose  plans that promise payments for the rest of their life and, should they  die, the life of their spouse as well.

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Straight  Life Annuity: $585, $540, and $496. The income stream is guaranteed to  last as long as the annuitant (payee) lives; payments stop when the  annuitant dies. A couple may choose a joint life annuity, on which  payments stop when the second annuitant dies.

Life  Annuity with 10-Year Period Certain: $582, $527, and $490. The income  stream is guaranteed to last as long as the annuitant lives, and also  guarantees that these payments will continue to the named beneficiary  until the 10-year guarantee period has ended. A couple may choose a  joint life annuity with period certain, for which the income stream is  guaranteed to last as long as at least one of the annuitants lives.  Note: Other period terms are available, and there also may be different  elections for spousal payments upon the death of the first annuity  recipient.

Life Annuity with Installment  Refund: $532, $504, and $484. The income stream is guaranteed to last as  long as the annuitant(s) lives, and provides that payments will  continue in installments until the amount received is equal to the  premium paid.

Period Certain Annuity for 10  Years: $915 and $915 (there is no carryover spousal benefit with this  annuity.) Payments are guaranteed to continue for 10 years, no matter  how long the annuitant lives. If the annuitant dies before the period  has expired, payments continue to the designated beneficiaries for the  remainder of the period. Note: Other period terms are available.

Twitter: @PhilMoeller