Cash-strapped Edinburgh Council will be forced to make a one-off payment to a staff pension pot after its most senior executive announced his early retirement.

Chief Executive Tom Aitchison has revealed his plans to step down before the end of the year. The £155,000 a year boss's timing means he will still receive a one off payment of £15,000 for organising the Lothians' General Election counts. And because that sum is included in his final year salary, he will then claim a boosted pension worth £85,000 a year.

It is also understood that Mr Aitchison, who has overall responsibility for around 19,000 staff, will qualify for a lump sum payment amounting to half his final salary.

Mr Aitchison's decision to leave his job just before his 60th birthday means the local authority will have to pay the difference amounting from the loss of contributions until he reaches the full retirement age of 65. The City Council confirmed they would make a "pension strain" payment of £14,600.

Mr Aitchison said: “In 36 years of public service, 16 years of which has been as a chief executive, I have witnessed enormous change in Edinburgh and have been proud to work with so many dedicated members of staff who have helped the Council achieve a great deal over the years. I have also greatly valued the partnership approach in Edinburgh, embracing both the public and private sectors.

“Although I am announcing my retirement at this stage, I remain committed to the Council and focused on ensuring that we continue to provide services of the highest quality while dealing with the many challenges that face us.”

Work to recruit a new Chief Executive will begin in April and officials hope Mr Aitchison's replacement will be in post by Christmas, allowing them to influence the budget process and prepare for the 2011 Scottish Parliament Election.

Mr Aitchison's announcement came alongside the news that two other senior council staff will also retire in the next 15 months. Director of Corporate Services Jim Inch will step down next January and Director of Finance Donald McGougan will leave the Council next May.