What the CalPERS CEO Sees Ahead in 2023

By Marcie Frost, Chief Executive Officer, CalPERS

Happy New Year!

As we forge ahead into 2023, the financial landscape looks very much like it did when we said goodbye to 2022.

These unsettled times likely leave you wondering about the relative health of your CalPERS benefits. Inflation, volatile financial markets, and slowing economic growth are all a cause for concern. Combined with ongoing geopolitical tensions, the horizon might seem bleak.

But remember that we’ve weathered tough times before in our 90-year history and have never failed to deliver on our promise to our members. You can expect us to make good on that promise again in 2023.

Our top priorities this year include mitigating risk in the investment portfolio, sustainability, providing exceptional health care, and employer affordability. Addressing each of these will help CalPERS continue as a trusted provider of retirement and health benefits for generations to come.

Limiting risk is vital for a global institutional investor like CalPERS. As a long-term investor, we prepare for multiple economic ups and down across several decades. Part of that work is making sure we’re taking the appropriate amount of risk to meet our investment goals.

During her first year on the job, Chief Investment Officer Nicole Mussico has been hard at work building a resilient and innovative investment program that includes more frequent reviews of investment strategy and building stronger internal risk management capabilities.

Another way we evaluate investment risk is through our sustainability efforts. While some have made climate change and renewable energy into political issues, at CalPERS they are very much investment issues.

We use climate risk to screen investment opportunities and to advocate for additional climate planning and disclosure from assets we already own—think of a company that has major manufacturing facilities near coastal waters, ones that could be interrupted by rising sea levels from a warming planet.

Beyond just risk assessment, sustainable investments can generate strong returns. Our infrastructure program has outperformed its benchmark for the most recent five- and ten-year periods. More than half of that portfolio is made up of wind and solar farms.

Sustainability is not a fad and our work in this space will become even more critical to our ability to pay benefits to our members.

We also continue to focus on our members’ health, as the second largest purchaser of health insurance in the nation after the federal government. We are focused on providing high quality, affordable care to our members, ensuring access to the care you need, when and where you need it.

We’re especially focused on providing equitable care to members, across all demographics. One way you can help us do that is to complete the Health Demographic Profile, a brief survey that helps us learn more about our members and determine which inequities exist for those we provide care for.

Finally, we’re doing everything we can to provide our employer partners with the resources and assistance they need to pay for the benefits promised to their employees. CalPERS contracts with thousands of government employers, including the State of California, California State University system, and local agencies throughout the state to provide employee benefits.

We provide annual reports that give employers the information they need in order to plan for these payments and prepare their budgets. We have programs available for those who want to make extra payments as well as for those who fall behind. Most importantly, our team is always available to provide real-time, personal assistance.

Despite the many challenges, CalPERS is committed to you and your family’s financial future. We’re up to the task, and I’m confident that our planning and resolve will not only see us through this time, but make us a stronger, more resilient organization.

We wish you and yours a healthy and prosperous 2023.