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Financial products provider Partnership is challenging the insurance industry to do more to help customers through open market options.

The provider said that exercising the OMO could seriously improve the standard of living of thousands of people and help mitigate against the effects of the economic squeeze.

OMOs allow members to transfer their pension fund from one life assurance company to another to achieve a higher annuity rate. The member must exercise an open market option before any benefits are drawn from the existing life assurance company in the form of an income or lump sum.

Partnership, which is a specialist in providing financial products for people living with health conditions and this week revealed that sales of its new smoker annuity product exceeded £22m in the past three months, said the industry needed to do more to promote the value of the OMO.

Ian Owen, chairman of Partnership, said: "With media headlines every day highlighting the ever increasing cost of living and the slowdown in the economy there is a real opportunity for the financial services industry to change public perception by helping its retirees maximise their income by at least 20 per cent or more if they qualify for an enhanced annuity. The huge uptake of our product is evidence of people's appetite for this opportunity, if only they knew the option existed and how to exercise it effectively."

He added: "It also shows that, once people are aware that they can shop around for a better deal, exercising the OMO becomes a 'no brainer', and that taking good financial advice will give them the best opportunity of having a comfortable retirement."

John Gabler, financial adviser at Hereford-based IFA Abacus Associates, said shopping around for the best option could be very worthwhile.

"The more in the pension pot the better OMO you will get, but all it is basically is shopping around to see who will give you the best annuity for that sum of money," he said.

"You can get a better annuity by shopping around. Different providers provide different quotations it can range from pounds to a couple of hundred pounds a year, it all depends on the size of the fund. If you have built up a pension of £10,000, then the amount of variation may not be so great, but on a large fund, of £100,000 or £200,000 the variation will be much larger and more significant," he added.