LANCASHIRE’S chief fire officer has retired with a £425,000 pension payout — then gone back to work in his old job on a £75,000 salary.

Peter Holland, Lancashire Fire and Rescue Service’s top officer, struck the deal with fire authority chiefs so that he stays on with a 50 per cent pay cut to oversee his successor’s appointment.

Bosses said the move had saved taxpayers money at a time of austerity.

Mr Holland, 57, who has been the chief fire officer since 1999, was due to retire on March 31.

But he was persuaded to stay on by the Lancashire Combined Fire Authority.

He will continue his role on a contract that could last as long as a year or until an appointment is made for his successor.

Mr Holland would have received the lump sum from his pension whenever he retired, and he is now claiming his pension.

Bob Warren, director of people and development at the fire service, said: “The Lancashire Combined Fire Authority agreed that Peter Holland could take retirement and return to the role in a separate contract.

“Peter’s salary on the new contract has reduced by 50 per cent and we are no longer paying employer pension contributions for him.

"This is a significant cost saving of £107,000 each year.“ Mr Holland said: “At the end of 2010 I gave notice that I wished to retire.

“However, the authority asked me if I would come back on a new contract to ensure stability during a potentially difficult time and to implement succession planning.

"I was honoured to be asked and accepted. I love my job and will continue to be committed to the service until I ultimately leave in due course.”

But Emma Boon, campaign director for the Taxpayers’ Alliance, criticised the move.

She said: “Taxpayers will have had no say in yet another massive lump sum that has been given to a departing public sector worker, despite the desperate need to make savings.”