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Toll of 9/11 illness deaths and disabilities to cost NYC $2 billion in pension funds

Fires still burn amidst the rubble of the World Trade Center on Sept. 13, 2001, days after the Sept. 11, 2001, terrorist attack. (Jim Watson/U.S. Navy/Getty Images/TNS)

The terrorist attacks of Sept. 11, 2001, are still costing New York billions of dollars, according to an analysis of city pension costs obtained by the New York Daily News.

In the immediate aftermath of 9/11, the federal government recognized that New York should not bear the brunt of all the costs — on top of the destruction and death — wrought by al-Qaida’s hijackers.

In 2002 and 2003, the feds ponied up more than $250 million to cover the pension-linked death benefits for the 343 FDNY members and 28 active duty and retired NYPD officers killed that day.

But there have been no payments since, and now the analysis by the city’s Office of the Actuary — the first since 2003 — estimates that the cost of 9/11-related retirements and deaths through June of this year has soared to $2.35 billion — and will keep growing by billions. The state is also facing a 9/11 pension liability of about $245 million, according to a separate state estimate obtained by the Daily News.

The huge jump is driven by two main factors.

First, the original payouts were not allowed to take into account the 3% cost of living increases that generally get tacked onto pensions every year. The second and largest factor is that thousands of more cops, firefighters, paramedics and other city and state workers have gotten sick or died since then.

While the state and city initially refused to acknowledge that work at ground zero was making people sick, legislation starting in 2005, and expanded since, has granted responders retirement benefits.

“We’ve seen a lot of public servants who’ve come forward and have acquired cancer or respiratory illnesses from the World Trade Center rescue, recovery and cleanup,” the city’s Chief Actuary Sherry Chan told the Daily News. “This analysis was to capture that amount, and provide that number and identify that cost.”

According to the data as of June, 3,035 members of the FDNY, 1,082 from the NYPD and 359 other city employees are on the pension books for World Trade Center-related deaths or disability.

More have been added since June, and the number is expected to grow as slower moving illnesses and cancers, like those linked to asbestos exposure emerge and take their toll. Precise estimates are impossible to determine, but Chan estimates it will cost “multi billions” more.

As things stand now, city taxpayers and the still-working members of the pension systems will bear all the cost. Chan thinks that responsibility should be shared, in much the same way that Congress eventually passed laws to fund health and compensation programs for responders.

“It was an attack on the country. It wasn’t an attack on the City of New York,” Chan said. “So if you think about it from that perspective, naturally you would think that these discussions should be opened up to other entities, such as the federal government, to see if the responsibility should be shared amongst the different parties involved.”

In New York, unlike in many pension systems around the country, the massive liability stemming from 9/11 isn’t something that can be blamed on politicians refusing to adequately fund retirements. By state law, pension systems are required to be fully funded, and there is no shortfall in the city’s retirement system.

It’s just that except for the first two years, New York is footing the bill for all 9/11-related pension costs on its own.

“This is not due to mismanagement, it’s not due to not appropriately putting in the pension contributions each year,” Chan said. “This is due to, again, an attack on the country that geographically just happened to be in the City of New York, and therefore the City of New York has taken on probably more than its fair share of paying for something that wasn’t even towards them.”

The matter is of special interest to the city police and firefighter unions, who, although they have pension plans that are more generous than many others in the country, are increasingly bearing more of the pension costs.

And as members get sick or die, instead of paying into the system, they or their surviving families become beneficiaries much sooner than they would have.

“When you take into account how many members were forced to retire early — some of them extremely shortened their careers — those were years, possibly decades for some, that they would have been putting money into the system,” said Uniformed Firefighters Association President Andrew Ansbro. “And then they immediately were put on the other end where they were taking money out of the system.”

Since Chan’s analysis is the first in 18 years, there has not been much discussion about how to address the expanding 9/11 liability. The original federal aid for the city pensions came through the Federal Emergency Management Agency under the 2001 9/11 disaster declaration. It is likely that the new mayor and governor would have to make a case to the White House or Congress for additional aid.

“Nobody could have ever imagined so many people with be out sick, and so many would die,” Ansbro said. “On 9/11, we lost 3% of the entire Fire Department in one hour. And since then, we’ve lost another 2% of everyone that’s working. You know, it’s not easy to overcome that.”

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