I am pleased that we are able to provide this extra funding, which will ensure that fire authorities can continue to deliver a first-class service

Jim Wallace Justice Minister

Reductions in the working week during the 1970s prompted a flood of new applicants to the service - and many of those are now approaching retirement.

That has given the fire service in Scotland an estimated pension bill of �240m over the next 10 years.

The Scottish Executive said the �5m package would be shared out on a needs basis.

Mr Wallace said the additional funding was just the start of the executive's commitment to address the problem both now and in the future.

"I am pleased that we are able to provide this extra funding, which will ensure that fire authorities can continue to deliver a first-class service," he said.

The financial effects of the situation have been estimated at over �240m over the next 10 years

George Purcell Cosla vice-president

"The executive recognises the need to address the longer-term implications of the increasing costs of fire service pensions and we will be setting up a short-term joint working group to consider the issue."

The extra money was welcomed by George Purcell, the vice-president of Cosla.

He said: "We discussed in great detail the problems faced by fire authorities in dealing with this problem when we met with the minister last week.

"This issue is often referred to as the pensions time bomb and the financial effects of the situation have been estimated at over �240m over the next 10 years.

"Today is a start and what is equally pleasing is that he has agreed to set up a short life working group to jointly address the level of resources and look at the overall pensions funding arrangement in the future."