Newcastle were officially confirmed as a Championship club for next season on Wednesday night, after Sunderland beat Everton.
The Magpies are currently four points behind their North East rivals with just one match to go.
Despite their relegation, Benitez has widely been credited with doing an impressive job at Newcastle.
Benitez was only given 10 games to save the Magpies, and he certainly sparked an improvement in their results.
However, Merson feels that Benitez let Newcastle down by the tactics he picked in a crucial match against Aston Villa.
Newcastle took on Villa last weekend, knowing that they needed to pick up three points to realistically have a chance of survival, but they only played with one striker.
Benitez was made to pay for his cautious approach, with the two sides playing out a 0-0 draw, and Merson has slammed the Spaniard for being so defensive.
“You don’t go to Aston Villa and play one up front, do you?” he said. “You do that and that’s what you get, you get relegated.
“You’re playing against the worst team in the Premier League by a million miles and he’s playing one up front when you need to win, what does that tell you? He’s managed Real Madrid and he’s doing that. It frustrates me.”
Benitez’s future is now up in the air, as he has a clause in his contract which means he is free to leave Newcastle.
David Moyes and Steve Bruce are amongst the favourites to take over if Benitez does leave the Tynesiders.