CalPERS hired a new chief executive Thursday, tapping the director of Washington state’s retirement system to run the nation’s largest public pension fund.
Marcie Frost, 51, will take over Oct. 3 for the recently retired Anne Stausboll, who guided the pension fund through a devastating bribery scandal. Doug Hoffner will serve as interim CEO until Frost’s arrival.
Frost has 16 years in the pension industry, mostly recently as executive director of Washington state’s Department of Retirement Systems. She will oversee a pension fund that has $301 billion in assets but has been struggling in recent years with uneven investment returns amid turmoil in the financial markets.
“The selection of Marcie was unanimous by the CalPERS board members involved,” said board president Rob Feckner in a prepared statement. “She has demonstrated throughout her career strong leadership and innovation.”
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The CalPERS CEO is one of the highest-profile positions in state government. The pension fund takes in billions of dollars every year from state and local taxpayers, as well as employees, and is often a lightning rod for criticism over its investment policies and performance. CalPERS took a pounding during the market crash of 2008, which has led to higher pension contribution rates and considerable criticism about the fund’s sustainability.
CalPERS earned just 2.4 percent in profits in the fiscal year that ended in June 2015, well below its target of 7.5 percent. The fund hasn’t reported results for the just-ended fiscal year, but Chief Investment Officer Ted Eliopoulos has told the Wall Street Journal that he expects the fund broke even.
“We can expect a low investment return environment ... in the coming years,” Frost said on a conference call with reporters Thursday. “There are challenges ahead of us.”
Frost’s hiring marks the second time in less than a decade that CalPERS has looked to Washington state for an important hire. In 2009, as it was beginning to come to grips with the financial crisis, it named Joseph Dear, then the head of the Washington State Investment Board, to be its chief investment officer. Dear oversaw a significant restructuring of CalPERS’ battered investment portfolio; he died in February 2014.
The California Public Employees’ Retirement System withstood a bribery scandal that ended with Stausboll’s predecessor, Fred Buenrostro, receiving a 4 1/2 -year prison sentence. Buenrostro took more than $250,000 in cash and other gifts from a former board member who was trying to steer CalPERS investment dollars to his private equity clients.