The Corporation has a noncontributory defined benefit pension plan covering a majority of employees. The plan's defined benefit formula generally based payments to retired employees upon their length of service multiplied by a percentage of the average monthly pay over the last five years of employment.

New employees hired on or after the July 10, 2010 were not eligible to participate in the plan, however, existing participants at that time continued to accrue benefits. On October 20, 2016, the Corporation amended its noncontributory defined benefit pension plan (“pension plan”) to freeze future retirement benefits after December 31, 2016. Beginning on January 1, 2017, both the pay-based and service-based component of the formula used to determine retirement benefits in the pension plan were frozen so that participants will no longer earn further retirement benefits. During the fourth quarter of 2018, the Corporation offered terminated, vested employees the option to receive lump sum settlement payments. A payout to participants of $3.3 million during the year ended December 31, 2018 is reflected in the projected benefit obligation and fair value of assets tables presented below. A settlement charge of $828 thousand has been recognized during the year ended December 31, 2018 in order to accelerate the recognition of a portion of the plan's unrecognized net loss.


Change in projected benefit obligation:	2020		2019
Benefit obligation at beginning of year	$	39,886	$	36,022
Service cost	—		—
Interest cost	1,300		1,522
Actuarial (gain) loss	3,735		4,474
Curtailments	—		—
Settlements	—		—
Benefits paid	(2,140)		(2,132)
Benefit obligation at end of year	$	42,781	$	39,886


Change in plan assets:	2020		2019
Fair value of plan assets at beginning of year	$	45,557	$	41,476
Actual return on plan assets	6,717		6,213
Employer contributions	—		—
Settlements	—		—
Benefits paid	(2,140)		(2,132)
Fair value of plan assets at end of year	$	50,134	$	45,557

Funded status	$	7,353	$	5,671

Actuarial losses in the Projected Benefit Obligation (PBO) in 2020 were primarily the result of the decrease in discount rate. The decrease in discount rate caused the PBO to increase by $3.5 million. Other sources of gain/loss such as plan experience, updated census data and minor adjustments to actuarial assumptions generated a combined loss of less than 1% of expected year end obligations.


Net periodic benefit cost	2020		2019		2018
Service cost, benefits earned during the year	$	—	$	—	$	—
Interest cost on projected benefit obligation	1,300		1,522		1,551
Expected return on plan assets	(2,444)		(2,221)		(3,309)
Amortization of net loss	213		204		188
Amortization of prior service cost	—		—		—
Recognized (gain) loss due to settlements	—		—		828
Net periodic cost (benefit)	$	(931)	$	(495)	$	(742)


Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):	2020		2019		2018
Net actuarial (gain) loss	$	(538)	$	481	$	736
Recognized loss	(213)		(204)		(1,016)
Amortization of prior service cost	—		—		—
Total recognized in other comprehensive income (loss) (before tax effect)	$	(751)	$	277	$	(280)

Total recognized in net (benefit) cost and other comprehensive income (loss) (before tax effect)	$	(1,682)	$	(218)	$	(1,022)

During 2020, the plan's total unrecognized net gain increased by $0.8 million. The variance between the actual and expected return on plan assets during 2020 decreased the total unrecognized net loss by $4.3 million. Because the total unrecognized net gain or loss in the plan exceeds 10% of the projected benefit obligation or 10% of the plan assets, and the plan is frozen, the excess will be amortized over the average future life expectancy of all plan participants. Prior to the plan freeze on December 31, 2016, the excess had been amortized over the average future working lifetime of all plan participants. As of January 1, 2020, the average expected future life expectancy of all participants which was 23.78 years. Actual results for 2021 will depend on the 2021 actuarial valuation of the plan.

The Corporation changes important assumptions whenever changing conditions warrant. At December 31, 2020 the Corporation used IRS Static 2021 Mortality Table with Mortality Improvement Scale MP-2019 as a basis for the Plan's valuation. At December 31, 2019, the Corporation used IRS Static 2020 Mortality Table with Mortality Improvement Scale MP-2018 as a basis for the Plan's valuation. The discount rate is evaluated at least annually and the expected long-term return on plan assets will typically be revised every three to five years, or as conditions warrant.

The Corporation's overall investment strategy is to achieve a mix of investments for long-term growth and for near-term benefit payments with a wide diversification of asset types. The target allocations for plan assets are shown in the table below. Equity securities primarily include investments in common or preferred shares of both U.S. and international companies. Debt securities include U.S. Treasury and Government bonds as well as U.S. Corporate bonds. Other investments may consist of mutual funds, money market funds and cash & cash equivalents. While no significant changes in the asset allocations are expected during 2021, the Corporation may make changes at any time.


Asset Class	Target Allocation 2020	Percentage of Plan Assets at December 31,				Expected Long-Term Rate of Return
		2020		2019
Large cap domestic equities	20% - 50%	43	%	38	%	8.7	%
Mid-cap domestic equities	0% - 15%	2	%	2	%	9.4	%
Small-cap domestic equities	0% - 10%	3	%	2	%	8.8	%
International equities	0% - 20%	3	%	8	%	5.1	%
Intermediate fixed income	30% - 70%	45	%	45	%	4.7	%
Alternative assets	0% - 10%	—	%	—	%	—	%
Cash	0% - 20%	4	%	5	%	1.3	%
Total		100	%	100	%

The investment policy of the plan is to provide for long-term growth of principal and income without undue exposure to risk. The focus is on long-term capital appreciation and income generation. The Corporation maintains an IPS that guides the investment allocation in the plan. The IPS describes the target asset allocation positions as shown in the table above.

The Corporation has appointed an Employee Pension and Profit Sharing Committee to manage the general philosophy, objectives and process of the plan. The Employee Pension and Profit Sharing Committee meets with the Investment Manager periodically to review the plan's performance and to ensure that the current investment allocation is within the guidelines set forth in the IPS. Only the Employee Pension and Profit Sharing Committee, in consultation with the Investment Manager, can make adjustments to maintain target ranges and for any permanent changes to the IPS. Quarterly, the Board of Directors' Trust and Employee Benefits Committee reviews the performance of the plan with the Investment Manager.

Fair value is the exchange price that would be received for an asset in the principal or most advantageous market for the asset in an orderly transaction between market participants on the measurement date. The fair value hierarchy described below requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

Discounted cash flows are calculated using spread and optionality. During times when trading is more liquid, broker quotes are used (if available) to validate the model. Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.


			Fair Value Measurement atDecember 31, 2020 Using
Plan Assets	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash	$	2,047	$	2,047	$	—	$	—
Equity securities:
U.S. companies	21,716		21,716		—		—


Mutual funds	23,778		23,778		—		—

Debt securities:
U.S. Treasuries/Government bonds	2,318		—		2,318		—
U.S. Corporate bonds	275		—		275		—
Total plan assets	$	50,134	$	47,541	$	2,593	$	—


			Fair Value Measurement atDecember 31, 2019 Using
Plan Assets	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash	$	2,210	$	2,210	$	—	$	—
Equity securities:
U.S. companies	17,939		17,939		—		—


Mutual funds	21,328		21,328		—		—

Debt securities:
U.S. Treasuries/Government bonds	3,054		—		3,054		—
U.S. Corporate bonds	1,026		—		1,026		—

Total plan assets	$	45,557	$	41,477	$	4,080	$	—

The Corporation does not expect to contribute to the plan during 2021. Funding requirements for subsequent years are uncertain and will significantly depend on changes in assumptions used to calculate plan funding levels, the actual return on plan assets, changes in the employee groups covered by the plan, and any legislative or regulatory changes affecting plan funding requirements. For tax planning, financial planning, cash flow management or cost reduction purposes the Corporation may increase, accelerate, decrease or delay contributions to the plan to the extent permitted by law.

On October 20, 2016, the Bank amended its defined contribution profit sharing, savings, and investment plan for all active participants to supersede the current contribution formula used by the Plan, which included eliminating the 1000 hours of service requirement to participate in employer contributions. Beginning on January 1, 2017, the Bank began contributing a non-discretionary 3% of gross annual wages for each participant, regardless of the participant’s deferral, and eliminated discretionary contributions for participants hired prior to July 1, 2010. Additionally, beginning January 1, 2017 the Bank began contributing a 50% match up to 6% of gross annual wages.

Expense related to both plans totaled $1.3 million, $1.3 million, and $1.2 million for the years ended December 31, 2020, 2019 and 2018, respectively. The plan's assets at December 31, 2020, 2019 and 2018 include 137,698, 155,696, and 148,716 shares, respectively, of Chemung Financial Corporation common stock, as well as other common and preferred stocks, U.S. Government securities, corporate bonds and notes, and mutual funds.

On October 20, 2016, the Corporation amended its defined benefit health care plan to not allow any new retirees into the plan, effective January 1, 2017. The effects of this freeze are reflected in the defined benefit health care plan disclosures as of December 31, 2017.


Changes in accumulated postretirement benefit obligation:	2020		2019
Accumulated postretirement benefit obligation - beginning of year	$	332	$	363
Service cost	—		—
Interest cost	9		16
Participant contributions	35		49
Amendments	—		—
Actuarial (gain) loss	(57)		31
Benefits paid	(70)		(127)
Accumulated postretirement benefit obligation at end of year	$	249	$	332


Change in plan assets:	2020		2019
Fair value of plan assets at beginning of year	$	—	$	—
Employer contribution	35		78
Plan participants’ contributions	35		49
Benefits paid	(70)		(127)
Fair value of plan assets at end of year	$	—	$	—

Unfunded status	$	(249)	$	(332)

Weighted-average assumption for disclosure as of December 31:

2020

2019

2018

Discount rate

2.61%

3.33%

4.35%

Assumed rate of future compensation increase

N/A

Health care cost trend: Initial (Pre-65/Post 65)

6.95% / 5.45%

Health care cost trend: Ultimate (Pre-65/Post 65)

4.75% / 4.75%

Year ultimate cost trend reached

2026

2025

2024


Net periodic cost (benefit)	2020		2019		2018
Service cost	$	—	$	—	$	—
Interest cost	9		16		16
Expected return on plan assets	—		—		—
Amortization of prior service benefit	(220)		(220)		(220)
Recognized actuarial loss	74		105		123
Recognized prior service benefit due to curtailments	—		—		—
Net periodic postretirement cost (benefit)	$	(137)	$	(99)	$	(81)


Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):	2020		2019		2018
Net actuarial (gain) loss	$	(57)	$	31	$	22
Recognized actuarial loss	(74)		(105)		(123)
Prior service credit	—		—		—
Amortization of prior service benefit	220		220		220
Total recognized in other comprehensive income (loss)(before tax effect)	$	89	$	146	$	119

Total recognized in net benefit cost and other comprehensive income (loss) (before tax effect)	$	(48)	$	47	$	38

Actuarial gain for 2020 is primarily the net impact of a decrease in discount rate, which raised the Accumulated Postretirement Benefit Obligation (APBO) by $10 thousand and claims and date experience, which (combined) decreased the APBO by $65 thousand. During 2020 the plan's total unrecognized net loss decreased by $131 thousand. Because the total unrecognized net gain or loss in the plan exceeds 10% of the accumulated postretirement benefit obligation, the excess will be amortized over the average future life expectancy of all plan participants. As of January 1, 2020, the average future life expectancy of all plan participants was 5.0 years. Previous to the plan freeze as of December 31, 2016, the amortization period was based upon average future working lifetime of active employees. Actual results for 2021 will depend on the 2021 actuarial valuation of the plan.

The change in unrecognized gain/loss is one measure of the degree to which important assumptions have coincided with actual experience. During 2020, the unrecognized net loss decreased by 39.2% of the December 31, 2019 accumulated postretirement benefit obligation. The Corporation changes important assumptions whenever changing conditions warrant. The discount rate and per capita costs are typically changed at least annually. Other material assumptions include rates of participant mortality and rates of increase in medical costs.

Weighted-average assumptions for net periodic cost as of December 31:

2020

2019

2018

Discount rate

3.33%

4.35%

3.74%

Expected return on plan assets

N/A

Assumed rate of future compensation increase

N/A

Health care cost trend: Initial

6.95% / 5.45%

6.50%

Health care cost tread: Ultimate

4.75% / 4.75%

5.00%

Year ultimate reached

2025

2024

2021

The Corporation’s policy is to contribute the amount required to fund postretirement benefits as they become due to retirees. The amount expected to be required in contributions to the plan during 2021 is $48 thousand.

The Corporation also sponsors an Executive Supplemental Pension Plan for certain former executive officers to restore certain pension benefits that may be reduced due to limitations under the Internal Revenue Code. The benefits under this plan are unfunded as of December 31, 2020 and 2019.


Change in projected benefit obligation:	2020		2019
Benefit obligation at beginning of year	$	1,232	$	1,179
Service cost	—		—
Interest cost	39		49
Actuarial (gain) loss	89		113
Benefits paid	(109)		(109)
Projected benefit obligation at end of year	$	1,251	$	1,232


Changes in plan assets:	2020		2019
Fair value of plan assets at beginning of year	$	—	$	—
Employer contributions	109		109
Benefits paid	(109)		(109)
Fair value of plan assets at end of year	$	—	$	—

Unfunded status	$	(1,251)	$	(1,232)


Weighted-average assumption for disclosure as of December 31:	2020		2019		2018
Discount rate	2.61	%	3.33	%	4.35	%
Assumed rate of future compensation increase	N/A		N/A		N/A
Weighted-average interest crediting rate	N/A		N/A		N/A


Other changes in plan assets and benefit obligation recognized in other comprehensive income (loss):	2020		2019		2018
Net actuarial (gain) loss	$	89	$	113	$	(47)
Recognized actuarial loss	(13)		(4)		(7)
Total recognized in other comprehensive income (loss) (before tax effect)	$	76	$	109	$	(54)

Total recognized in net benefit cost and other comprehensive income (loss) (before tax effect)	$	128	$	162	$	(1)

Actuarial losses in the projected benefit obligation in 2020 were primarily the result of the decrease in discount rate, $69 thousand, and mortality losses, $23 thousand. Other sources of gains/losses, including the update in mortality table, generated losses of less than 1% of expected year end obligations.

During 2020, the plan's total unrecognized net loss increased by $76 thousand. Because the total unrecognized net gain or loss exceeds the greater of 10% of the projected benefit obligation or 10% of the plan assets, the excess will be amortized over the average future life expectancy of all participants. Previously, the excess had been amortized over the average future working lifetime of active participants, however, there are no longer any active participants in the plan as of January 1, 2017, so the amortization period was changed to be the average future life expectancy of all plan participants. As of January 1, 2021, the average future life expectancy of plan participants was 12.04 years.

Weighted-average assumptions for net periodic cost as of December 31:

2020

2019

2018

Discount rate

3.33

4.35

3.74

Expected asset return

N/A

Assumed rate of future compensation increase

N/A

Weighted-average interest crediting rate

N/A

The discount rate was determined by projecting the plan's expected future benefit payments as defined for the projected benefit obligation, discounting those expected payments using a theoretical zero-coupon spot yield curve derived from a universe of high-quality bonds as of the measurement date, and solving for the single equivalent discount rate that resulted in the same projected benefit obligation.

The change in unrecognized net gain.loss is one measure of the degree to which important assumptions have coincided with actual experience. During 2020 the unrecognized net loss increased by 6.2% of the December 31, 2019 projected benefit obligation.

The Corporation expects to contribute $110 thousand to the plan during 2021. Corporation contributions are equal to the benefit payments to plan participants. Funding requirements for subsequent years are uncertain and will significantly depend upon changes in assumptions used to calculate plan funding levels, the actual return on plan assets, changes in the employee groups covered by the plan, and any legislative or regulatory changes affecting plan funding requirements. For tax planning, financial planning, cash flow management or cost reduction purposes, the Corporation may increases, accelerate, decrease or delay contributions to the plan to the extent permitted by law.

The Corporation also sponsors a Defined Contribution Supplemental Executive Retirement Plan for certain current executive officers, which was initiated in 2012. The plan is unfunded as of December 31, 2020 and is intended to provide nonqualified deferred compensation benefits payable at retirement, disability, death or certain other events. The accrued obligation for the plan as of December 31, 2020 and 2019 was $2.0 million and $1.6 million, respectively. A total of $0.4 million, $0.4 million, and $0.3 million was expensed during the years ended December 31, 2020, 2019, and 2018, respectively. In addition to each participants account being credited with the annual company contribution, each account will receive a quarterly interest credit that will equal the average yield on five year U.S. Treasury Notes.