Using the Lump Sum option when creating a pension will create taxable income. That's one option for those with pension options.
But creating a rollover from the pension to an IRA is a second option and this rollover to an IRA is not a taxable event.
If you intend to rollover a qualified, tax-deferred pension to an IRA, you should not treat this money as a pension and instead set it up as an IRA. Even if you have not transferred or rolled over the money yet to an IRA--perhaps you plan to create this IRA with a rollover five years from now--you should still go ahead and set it up as an IRA now since when the money is eventually distributed, it will be distributed from this IRA. It doesn't matter that until that rollover account is created it is technically in a pension account.