Homeownership and Age-Dependent Contributions Within a Funded Defined Contribution Pension Plan

This thesis analyzes how the timing of mandatory pension contributions affects life-cycle consumption, portfolio choice, and housing decisions. A quantitative life-cycle model calibrated to the Swedish pension system is developed, in which individuals face uncertain labor income, mortality risk, and stochastic returns on financial and housing assets. Utility is derived from both non-durable consumption and housing services, and pension contributions follow either fixed or age-dependent schedules within a funded defined contribution framework. The results show that age-dependent, back-loaded contribution rates improve replacement rates out of total wealth without materially altering life-cycle consumption patterns. While average replacement rates derived from pension wealth alone decline slightly, replacement rates based on total wealth increase, and individuals in the lower tail of the distribution experience improved retirement outcomes. Age-dependent contribution rates also lead to higher accumulation of financial and housing wealth during the working life, while slightly reducing homeownership rates in midlife due to increased exposure to labor income risk. Overall, the findings suggest that allowing pension contributions to vary with age can enhance retirement income adequacy while preserving consumption smoothing, even when housing choices are explicitly incorporated.