Pension Coverage and Portability Improvement Act of 1991

Pension Coverage and Portability Improvement Act of 1991 - Title I: Portable Pension Plans - Amends the Employee Retirement Income Security Act of 1974 (ERISA) to set forth definitions and requirements relating to portable pension plans.

Defines a portable pension plan as a pension plan consisting of one or more simplified employee pensions (SEPs), individual retirement accounts (IRAs), individual account plans, or tax-deferred annuities which meet requirements for: (1) the amount contributed by employers on behalf of employees under specified Internal Revenue Code (IRC) provisions; and (2) portability under ERISA as amended by this Act. Requires for portability that a plan provides for: (1) distribution of all or part of the accrual benefit in the form of a direct transfer from the plan to a portable pension plan, pursuant to a written election any individual who has an accrued benefit under the plan (or the beneficiary of the dead individual), and spousal consent; and (2) acceptance, with respect to any individual, of any transfer to the plan of a plan distribution which is not includable in gross income, any plan distribution to such a plan which is not includable in gross income, or any direct transfer to such plan from any other SEP plan, portable pension plan, or specified plans under IRC which include a tax-exempt trust.

Requires any portable pension plan providing for individual accounts to permit participants or beneficiaries to exercise control over the assets in their accounts as required by specified ERISA provisions and as determined by regulations of the Secretary of Labor.

Requires distributions of the accrued benefit under portable pension plans to be made only: (1) in one of certain permitted standard retirement forms (but allows election of other forms under specified conditions); and (2) with the consent of the participant or beneficiary, and upon their timely written application, and in accordance with the terms of the plan. Requires the administrator of a portable pension plan to, immediately before making a distribution, provide to the individual who is to be the recipient a written explanation of: (1) possible taxes or penalties under IRC; (2) the applicable permitted retirement income form's terms and conditions; (3) the participant's right to elect another form; and (4) the rights of the participant's spouse.

Directs the Secretary of Labor, in consultation with the Secretary of the Treasury, to prescribe one or more prototype portable pension plans, within 12 months after enactment of this Act. Outlines the types of persons or entities that may be plan sponsors of portable pension plans.

Requires all employers, within 24 months after enactment of this Act, to provide for maintenance of an individual account plan into which employees may make salary reduction contributions. Allows employers to satisfy such requirement by: (1) amending an existing pension plan maintained by the employer to comply with portable pension plan requirements for such salary reduction contributions; (2) adopting a minimum-benefit pension plan providing for voluntary salary reduction contributions; or (3) adopting a separate portable pension plan, as described under this Act.

Amends the IRC to set forth maximum salary reduction amount tax-deductible contribution limits for minimum-benefit portable pension plans.

Requires, in a defined benefit plan, that the present value of accrued benefits of a participant in a minimum-benefit pension plan shall be determined by using an assumed interest rate of three percent. (Provides special transition rules, for the first consecutive three full plan years following enactment of this Act, under which such rate is six percent for the first year, five percent for the second year, and four percent for the third year.)

Amends IRC to increase to 25 percent (from ten percent) the early withdrawal penalty tax on preretirement distributions of employee pension plan contributions that are not rolled over into an IRA or other qualified plan.

Title II: Minimum Benefit Pension System - Requires employers to provide for the maintenance of a minimum-benefit pension plan in which all of their employees may be participants after completing one year of service with the employer. Allows employers to provide for such plan maintenance only by: (1) maintaining the plan; (2) adopting a prototype portable pension plan; or (3) entering into an agreement with one or more other employers, employee organizations, or both, under which such plan is maintained.

Requires minimum-benefit pension plans to be described under specified IRC provisions, include a tax-exempt trust, and, with respect to employer maintenance: (1) for an individual account plan, have an employer contribution for each participant's account of at least six percent of their compensation paid by the employer for the plan year; or (2) for a defined benefit plan, have each participant's accrued benefit derived from employer contributions equal the greater of the accrued benefit under the plan, the present value of accrued benefits, or the amount of the participant's accrued benefit if the employer had made contributions to an individual account. Requires that all plans qualifying under specified IRC provisions to be taken into account in determining whether an employer meets such maintenance requirements. Grants a participant a nonforfeitable right to 100 percent of the part of the accrued benefit derived from employer contributions.

Sets forth transition rules for such minimum-benefit pension system. Makes the employer contribution requirements inapplicable for the first plan year for which the employer provides such maintenance. Requires, with respect to applying such employer contributions requirements for the following three plan years, that such a plan be maintained by: (1) all employers of over 500 employees, for the first plan year; (2) all employers of over 100 employees, for the second plan year; and (3) all employers, for the third plan year. Requires with respect to the first three plan years in which an employer is required to maintain and contribute to such plan that the minimum portion of the employee compensation that must be equaled by such contribution be three percent for the first year, four percent for the second year, and five percent for the third year.

Prohibits the minimum benefit (as described under the requirement for the present value of accrued benefits) from being diminished or offset in any way by other employee benefit plans or specified benefits under the Social Security Act.

Amends the IRC to impose a tax on employers for failure to make minimum-benefit plan contributions. Sets such tax at 110 percent of the amount by which the required contribution exceeds that actually contributed for the year.

Makes such minimum benefit pension system under title II of this Act effective 60 months after enactment of this Act unless: (1) the Secretary of Labor certifies to the Congress that at least 75 percent of full-time employees of employers covered by ERISA are active participants in portable pension plans as defined under title I of this Act meet minimum-benefit pension plan requirements established in title II of this Act; (2) the Congress is persuaded by the Secretary's findings that the goals of universal pension coverage and improved pension portability in the private pension system have been substantially achieved; and (3) this title II is repealed by a simple majority vote of both Houses of the Congress.

Directs the Secretaries of Labor and of the Treasury to issue regulations and procedures for enactment of this Act within 12 months after its enactment.