Canada’s senior citizens will get $2.7 billion more in guaranteed income supplement benefits over the next five years and some financial planning flexibility, according to the 2005 federal budget.

The government plans to increase maximum monthly GIS benefits by $36 for single seniors and by $58 for senior couples to account for yearly increases of $400 and $700 respectively. Half of these increases will take effect Jan. 1, 2006, and the other half Jan. 1, 2007.

In all the increases will lift GIS benefits by $2.7 billion over five years instead of a previously committed $1.5 billion, the budget says.

“Last summer, we made a commitment to increase GIS payments over the next five years,” Finance Minister Ralph Goodale said in his budget speech to the House of Commons. “Today, we will not only honour that commitment, we will do better.”

Goodale says 1.6 million seniors, most of whom are women, would benefit.

The GIS provides low-income seniors a fully indexed benefit that ensures a basic level of income.

In other measures, the budget lays out plans to spend $13 million over the next five years for a new seniors secretariat to research and develop policy, as well as work with seniors’ organizations.

The latest budget also tops up the “new horizons for seniors” program by $15 million over the next three years to bring funding up to $25 million. The program was set up last year to promote voluntary sector activities in support of seniors.

In retirement planning, the annual contribution ceiling to RRSP will go to $22,000 by 2010 from the current $16,500.

The Martin government also plans to add flexibility to rules governing life income funds. Seniors become ineligible to hold RRSPs at age 71 but they can roll those savings into LIFs as a new tax shelter.

Now, LIFs will no longer have to be collapsed into annuities when the planholder reaches age 80.