The previous two chapters focused on the denominator of the elderly/non-elderly spending ratio, exploring the origins of different levels of spending in Italy and the Netherlands on two key social welfare programs directed at the non-elderly: family allowances and unemployment benefits. The divergent spending paths that these two countries followed in the post–World War II period, and the much greater emphasis on spending for youth and working-age adults in the Netherlands than in Italy, appeared to be a result of the interaction between the structure of social programs and the kind of competitive strategies that politicians used to gain support in the electoral arena.

This chapter focuses on the numerator of the age orientation measure: pension spending. It argues that the interaction of program structure (universal or fragmented occupational) and how politicians compete (using programmatic or particularistic appeals) shapes the development of pension expenditures in Italy and the Netherlands. In the Netherlands, public pensions have been available on a citizenship basis since immediately following World War II, and political competition has been highly programmatic. As a result, electoral pressure has not eroded the floors and ceilings that maintain benefit levels and eligibility rules at levels conducive to moderate pension expenditures, despite coverage rates of close to 100 percent. Italy, by contrast, provides subsistence-level benefits or above to only about 70 percent of the elderly.