Under the program, retired volunteers over age 65 with at least 25 years of service would receive up to $350 a month.
Up to 15 years will be grandfathered into the program for volunteers already on the job.
Payments from the pension plan won't begin for at least 10 years, according to Commissioners President Gregory I. Snook.
County Commissioner James R. Wade made the motion as a compromise.
The Washington County Volunteer Fire and Rescue Association has been seeking funding for the program for years, and had requested $275,000 for the program next year.
Grimes had told the commissioners their contribution would be money well spent because it would help fire and rescue companies retain volunteers and thus reduce the number of paid personnel required.
Wade said the commissioners should remember that fire and rescue companies are getting $1 million in funding a year in tip jar proceeds funneled through the Washington County Gaming Commission, and should be able to fund at least a portion of the retirement program themselves.
Commissioner Ronald L. Bowers said he didn't favor using tip jar money to pay for a pension plan because that money might not be around forever.
The commissioners also agreed to fund a new fire instructor at the Career Studies Center at $30,000.
The $180,000 increase for fire and rescue funding would be about a 12 percent increase, for a total of $1.73 million.
Grimes had asked for an increase of $825,000, or 53 percent.
Requests that weren't included in the commissioners working budget include:
$350,000 for a new fire training center at Hagerstown Junior College.
$178,000 to cover half of the utility costs of fire and rescue companies.