We were told that we didn’t need to do anything about the tax side of things. Is this correct?
This is probably a bit simplistic or being more brutal totally misleading advise - practicably speaking most pension payouts are done with an element of tax deducted at source. so to get your pension the pension company doesn't need you to do anything active in that regard to get your cash.
However the basic principle is normally all individuals MUST advise hmrc if they owe extra tax on any taxable income received . So if you have pension payout with 20%/40% tax deducted and you are 45% rate taxpayer the onus is on you to contact hmrc and advise them if you owe extra tax. Note if all income is subject to paye i would expect hmrc to issue an p800/simple assessment calculation here if you don't do anything - this won't happen till months after the end of the tax year though - and they aren't exactly 100% reliable in that regard. So at a minimum do the tax year end calcs to check tax deducted is correct for the tax year as a whole. i am presuming here that there is no added complication of delayed payouts that you would want to argue related to a previous tax year.
Note its more common to be due a rebate than owe tax here so the end result might be quite nice if its a cheque posted through your door - in this regard advance planning to minimise the chances that any "spike in income" will take you into a different tax bracket if this can be avoided is worthwhile.