In the UK at least you may get tax reductions for paying in but, as you say, when drawing down your pension it is all subject to income tax (except the 25% tax-free lump sum, up to a limit of £268,275).
Gains in most pensions are free from CGT though:
> The disposal of an investment held for the purposes of a registered pension scheme is not a chargeable gain. It is therefore exempt from capital gains tax.
There are some exemptions for atypical situations, such as overseas pensions schemes, which may explain having to pay CGT.
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg67650
I'm not going to declare the actual numbers, but this is the actual reality.
My wife contributed £0.45p
The employer contributed £0.45p
At maturity, after 25 years, the pension pot was £1
After tax, we received £0.76p
The amount was not even close to £268,275.
Pension pot: £1
25% tax-free lump sum: £0.25
Higher income tax of 40% on remaining £0.75: £0.30
Pension pot after income tax: £0.25 + £0.75 - £0.30 = £0.70
Effective tax rate: 30%
This would be reduced a bit if taking into account personal allowance. For example if the pension pot was £100k and the personal allowance £12,500 the effective tax rate would be 25%.
Thanks, that clears it up 🫡
