The Greens are calling for a Senate inquiry into how the government sets the pension and welfare rates.
The push comes after the federal government's announcement it would cut deeming rates for pensioners, leaving advocacy groups disgruntled that the move doesn't go far enough.
Treasurer Josh Frydenberg says pensioners could receive up to $804 more per year, with the decision to cost about $600 million without hurting the budget's bottom line.
"We're strengthening the arm of around one million welfare recipients," he told ABC's Insiders program on Sunday.
Mr Frydenberg said the rate applied to bank deposits, superannuation returns and to yields on stocks.
Families and Social Services Minister Anne Ruston said affected pensioners would receive up to $40.50 extra per fortnight for couples and $31 for singles.
Deeming rates are used to estimate how much some pensioners earn on their financial investments, including about 630,000 pensioners and nearly 350,000 people receiving other income-tested payments.
The deeming rate on the first $51,800 of a single pensioner's financial investments - and the first $86,200 of a couple's - will drop from 1.75 per cent to 1 per cent.
The deeming rate for balances above those amounts will go from 3.25 per cent down to 3 per cent.
Senator Ruston says the rate is decided by looking at a range of financial assets and determining what the likely return would be.
But advocacy groups, including National Seniors Australia and the Combined Pensioners and Superannuants Association, want the government to explain how it arrived at the new rate.
"It's too tempting to have the deeming rates controlled by governments who have been using this for too long as part of their budget balancing process," NSA's Ian Henschke said.
"Unless we have a clear understanding of the policy decision making process, this looks arbitrary and even if we do understand the process, it should be set by an independent authority."
The Greens will refer the issue to a Senate inquiry when parliament resumes next week.
Council on the Ageing's Ian Yates said the cut was needed as interest paid on savings and term deposits have been hurt by the central bank's decision to cut the cash rate.
"We look forward to further discussions on how the deeming rate might be set in the future to remove the current level of uncertainty," he said in a statement.
Mr Yates also pointed out that deeming rates did not affect 75 per cent of pensioners.
The payments will start from the end of September, but will be backdated to July 1.
Deputy Labor leader Richard Marles said the decision was "far too little, far too late" for older Australians.
"The truth is, what this really means is the government continues to have its hands in the pockets of pensioners, and at the same time pensioners today can feel like this decision is a slap in their face," he told Sky News.
"This is a government which is attempting to balance its books on the back of pensioners and it's simply not good enough."
The move also affects people on the disability support pension, carer payment, the parenting payment and Newstart.