Autumn Statement 2012: Three-year squeeze on welfare benefits Benefits excluding the state pension but including income support, child benefit and housing benefit,will rise by just one per cent a year until April 2015. The Chancellor said in his Autumn Statement that this was "fair," because working people's pay had risen at half the rate of benefits since 2008. The state pension, on the other hand, will rise by 2.5pc to £110.15 a week. Tax thresholds will rise by less than inflation, meaning that 400,000 middle class professionals will end up paying 40pc tax through a phenomenon known as "fiscal drag" - where wage growth fuelled by inflation means that more people are pulled into the higher rate band. The Chancellor also plans to save money through taxing well-off people on their pension pots. The tax-free allowance for pensions will be cut from 2014/15 from £1.5m to £1.25m over a lifetime and the annual tax-free allowance will be cut from £50,000 to £40,000. Changes in the higher rate tax threshold will raise £1bn, the Chancellor said. He is raising the tax threshold by just one per cent in 2014 and 2015, well below the rate of inflation. Basic rate taxpayers will see their personal allowance - which is the amount that they can earn before paying any tax - rise to £9,440 from April 2014. This is higher than expected and the total personal allowance is expected to reach £10,000 in April 2014.