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Part of the pension income test should be reviewed to better reflect Australia’s record low interest rates, according to federal Labor.

The opposition is urging the government to review pension deeming rates, which are used in the income test to assume how much people are earning on their financial investments.

The deeming rates for the pension are as high as 3.25 per cent.

They haven’t been updated in more than four years, when the Reserve Bank of Australia’s official cash rate was 2.25 per cent.

The interest rate, which reflects what the central bank charges commercial banks on overnight loans and influences other interest rates, was reduced this week to 1.25 per cent.

A lower rate, aimed at stimulating the economy, is typically considered good news for mortgage holders but not so great for savers.

Labor’s human services spokeswoman Linda Burney says with standard term deposits now earning two per cent or less, it’s clear the deeming rates aren’t keeping up with what pensioners are earning.

“This week, the treasurer demanded banks pass on the Reserve Bank’s rate cut to home loan customers in full,” she said in a statement on Sunday.

“Why won’t he do the same for pensioners? It’s hypocrisy.”