The current Dutch cabinet has announced reforms into the direction of further individualizing the pension contract. This could lead to personalized pensions for heterogeneous agents accommodating for life events with collective risk sharing. This thesis derives the optimal dynamic contribution scheme and investment strategy over the life cycle for pension plan participants. A suboptimal pension contract, in terms of suboptimal contribution scheme and suboptimal investment strategy, will lead to welfare losses. These welfare losses are crucial in the policy discussion of the attractiveness of a customized pension contract. Tailoring the pension contract, in terms of contribution scheme and asset allocation, on heterogeneity characteristics such as risk aversion and assumed wage pro le provides substantial welfare gain under the assumptions made in this thesis. Adjusting the contribution scheme in the pension contract based on life events such as receiving
an unexpected bequest, housing wealth and temporary unemployment is also signi cantly welfare enhancing. Adjusting the investment strategy optimally in the pension contract based on life events is marginally attractive. Including the relative importance of the state pension in the analysis (performed for a limited number of cases) yields similar policy implications, though the quantitative results change. For example, the welfare gain of adjusting the contribution rate in the pension contract on the accumulation of housing wealth crucially depends on the ratio of housing wealth to labor income. Adjusting the contribution scheme in the pension contract to realized asset returns might be attractive as well.