The California Public Employees’ Retirement System hired Stephen Gilmore from New Zealand’s sovereign wealth fund as chief investment officer to run its roughly $495 billion portfolio. 

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Gilmore, who held the same role for the New Zealand Superannuation Fund, will start in July, Calpers said in a statement. 

The largest U.S. pension system is looking to snap a long spell of lackluster returns and leadership churn. Its previous CIO, Nicole Musicco, abruptly departed in September, less than two years after taking over as the pension’s fourth CIO since 2009. 

“Stephen has worked in very public roles during his career for organizations where transparency and resiliency are essential,” Calpers Chief Executive Officer Marcie Frost said in the statement. “He brings not only a wealth of investing knowledge to the job, but he also has the temperament to understand the needs of our members and public sector employers who depend on Calpers to be a steady, long-term partner.”

Gilmore is walking into one of the most high-profile jobs in investing and faces a tough mandate: leading a team of more than 300 people on a high-pressure quest to meet the chronically underfunded pension’s annualized return target of 6.8 percent, while also navigating political tensions and intense public scrutiny. 

Calpers, which manages money for more than 2 million retired police, firefighters and public services employees, has only 72 percent of the assets it needs to pay for future benefits owed. That means the stakes are high for the next CIO to meet its return target. If it falls short, municipalities across California could be forced to make up the difference and even cut services to meet obligations. 

“There are high expectations, and rightly so, when it comes to fulfilling the promises made in serving those who serve California,” Gilmore said in the statement.

Calpers gained 5.8 percent for the fiscal year ended in June. Over the most recent five-year period, the fund ranked in the bottom 90th percentile when compared to peers tracked by Wilshire Trust Universe Comparison Service, and its 10-year record is in the bottom 84th percentile. 

In New Zealand, Gilmore has overseen the world’s best-performing sovereign fund since 2019, with annual returns of more than 12 percent over the past decade, according to the statement.