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PENSION PLAN AND OTHER BENEFIT PLANS
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
PENSION PLAN AND OTHER BENEFIT PLANS PENSION PLAN AND OTHER BENEFIT PLANS
Pension Plan

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.
The Corporation uses a December 31 measurement date for its pension plan.

The following table presents (1) changes in the plan's projected benefit obligation and plan assets, and (2) the plan's funded status at December 31, 2021 and 2020 (in thousands):
Change in projected benefit obligation:20212020
Benefit obligation at beginning of year$42,781 $39,886 
Service cost— — 
Interest cost1,084 1,300 
Actuarial (gain) loss(1,300)3,735 
Curtailments— — 
Settlements— — 
Benefits paid(2,161)(2,140)
Benefit obligation at end of year$40,404 $42,781 

Change in plan assets:20212020
Fair value of plan assets at beginning of year$50,134 $45,557 
Actual return on plan assets5,014 6,717 
Employer contributions— — 
Settlements— — 
Benefits paid(2,161)(2,140)
Fair value of plan assets at end of year$52,987 $50,134 
Funded status$12,583 $7,353 

Amount recognized in accumulated other comprehensive income (loss) at December 31, 2021 and 2020 consist of the following (in thousands):
 20212020
Net actuarial loss$4,833 $8,602 
Prior service cost— — 
Total before tax effects$4,833 $8,602 

The accumulated benefit obligation at December 31, 2021 and 2020 was $40.4 million and $42.8 million, respectively.

Actuarial gains in the Projected Benefit Obligation (PBO) in 2021 were primarily the result of the increase in discount rate. The increase in discount rate caused the PBO to decrease by $1.3 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.
The principal actuarial assumptions used in determining the projected benefit obligation as of December 31, 2021 and 2020 were as follows:
 20212020
Discount rate2.87 %2.61 %
Assumed rate of future compensation increaseN/AN/A
Weighted-average interest crediting rateN/AN/A

Components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss) in 2021 and 2020 consist of the following (in thousands):
Net periodic benefit cost20212020
Service cost, benefits earned during the year$— $— 
Interest cost on projected benefit obligation1,084 1,300 
Expected return on plan assets(2,696)(2,444)
Amortization of net loss151 213 
Amortization of  prior service cost— — 
Recognized (gain) loss due to settlements— — 
Net periodic cost (benefit)$(1,461)$(931)

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):20212020
Net actuarial (gain) loss$(3,618)$(538)
Recognized loss(151)(213)
Amortization of prior service cost— — 
Total recognized in other comprehensive income (loss) (before tax effect)$(3,769)$(751)
Total recognized in net (benefit) cost and other comprehensive income (loss) (before tax effect)$(5,230)$(1,682)

During 2021, the plan's total unrecognized net loss decreased by $3.8 million. The variance between the actual and expected return on plan assets during 2021 decreased the total unrecognized net loss by $2.3 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, 2021, the average expected future life expectancy of all participants which was 23.07 years. Actual results for 2022 will depend on the 2022 actuarial valuation of the plan.

The principal actuarial assumptions used in determining the net periodic benefit cost for the years ended December 31, 2021, 2020 were as follows:
 20212020
Discount rate2.61 %3.33 %
Expected return on assets5.50 %5.50 %
Assumed rate of future compensation increaseN/AN/A
Weighted-average interest crediting rateN/AN/A

The Corporation changes important assumptions whenever changing conditions warrant. At December 31, 2021 the Corporation used IRS Static 2022 Mortality Table with Mortality Improvement Scale MP-2020 as a basis for the Plan's valuation. 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. 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 2022, the Corporation may make changes at any time.

The expected return on plan assets was determined based on a CAPM using historical and expected future returns of the various asset classes, reflecting the target allocations described below.
Asset ClassTarget Allocation 2021Percentage of Plan Assets at December 31,Expected Long-Term Rate of Return
  20212020 
Large cap domestic equities
20% - 50%
42 %43 %10.1 %
Mid-cap domestic equities
0% - 15%
— %2 %10.5 %
Small-cap domestic equities
0% - 10%
5 %3 %9.0 %
International equities
0% - 20%
4 %3 %11.1 %
Intermediate fixed income
30% - 70%
45 %45 %4.2 %
Alternative assets
0% - 10%
— %— %— %
Cash
0% - 20%
4 %4 %1.1 %
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.
As of December 31, 2021 and 2020, the Corporation's pension plan did not hold any direct investment in the Corporation's common stock.
The Corporation used the following methods and significant assumptions to estimate the fair value of each type of financial instrument held by the pension plan:
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.
The fair value of the plan assets at December 31, 2021 and 2020, by asset class are as follows (in thousands):
Fair Value Measurement atDecember 31, 2021 Using
Plan AssetsCarrying ValueQuoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
Cash$2,270 $2,270 $— $— 
Equity securities:    
U.S. companies21,927 21,927 — — 
Mutual funds26,345 26,345 — — 
Debt securities:    
U.S. Treasuries/Government bonds2,181 2,181 — — 
U.S. Corporate bonds264 264 — — 
Total plan assets$52,987 $52,987 $— $— 

Fair Value Measurement atDecember 31, 2020 Using
Plan AssetsCarrying ValueQuoted 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. companies21,716 21,716 — — 
Mutual funds23,778 23,778 — — 
Debt securities:    
U.S. Treasuries/Government bonds2,318 2,318 — — 
U.S. Corporate bonds275 275 — — 
Total plan assets$50,134 $50,134 $— $— 

The following table presents the estimated benefit payments for each of the next five years and the aggregate amount expected to be paid in years six through ten for the pension plan (in thousands):
Calendar YearFuture Expected Benefit Payments
2022$2,295 
2023$2,329 
2024$2,336 
2025$2,328 
2026$2,326 
2027-2031$11,344 
The Corporation does not expect to contribute to the plan during 2022. 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.

Defined Contribution Profit Sharing, Savings and Investment Plan

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 for the years ended December 31, 2021 and 2020. The plan's assets at December 31, 2021 and 2020 include 118,081 and 137,698 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.

Defined Benefit Health Care Plan

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.
The Corporation uses a December 31 measurement date for its defined benefit health care plan.

The following table presents (1) changes in the plan's accumulated postretirement benefit obligation and (2) the plan's funded status at December 31, 2021 and 2020 (in thousands):
Changes in accumulated postretirement benefit obligation:20212020
Accumulated postretirement benefit obligation - beginning of year$249 $332 
Service cost— — 
Interest cost6 9 
Participant contributions20 35 
Amendments— — 
Actuarial (gain) loss(37)(57)
Benefits paid(44)(70)
Accumulated postretirement benefit obligation at end of year$194 $249 
Change in plan assets:20212020
Fair value of plan assets at beginning of year$— $— 
Employer contribution24 35 
Plan participants’ contributions20 35 
Benefits paid(44)(70)
Fair value of plan assets at end of year$— $— 
Unfunded status$(194)$(249)
Amount recognized in accumulated other comprehensive income (loss) at December 31, 2021 and 2020 consist of the following (in thousands):
 20212020
Net actuarial loss$208 $286 
Prior service credit— (220)
Total before tax effects$208 $66 

Weighted-average assumption for disclosure as of December 31:20212020
Discount rate
2.87%
2.61%
Assumed rate of future compensation increaseN/AN/A
Health care cost trend: Initial (Pre-65/Post 65)
6.95% / 5.45%
6.95% / 5.45%
Health care cost trend: Ultimate (Pre-65/Post 65)
4.75% / 4.75%
4.75% / 4.75%
Year ultimate cost trend reached20272026

The components of net periodic postretirement benefit cost for the years ended December 31, 2021 and 2020 are as follows (in thousands):
Net periodic cost (benefit)20212020
Service cost$— $— 
Interest cost6 9 
Expected return on plan assets— — 
Amortization of prior service benefit(220)(220)
Recognized actuarial loss42 74 
Recognized prior service benefit due to curtailments— — 
Net periodic postretirement cost (benefit)$(172)$(137)

Other changes in plan assets and benefit obligations
  recognized  in other comprehensive income (loss):		20212020
Net actuarial (gain) loss$(37)$(57)
Recognized actuarial loss(42)(74)
Prior service credit— — 
Amortization of prior service benefit220 220 
Total recognized in other comprehensive income (loss)(before tax effect)$141 $89 
Total recognized in net benefit cost and other comprehensive income (loss) (before tax effect)$(31)$(48)

Actuarial gain for 2021 is primarily the net impact of an increase in discount rate, which decreased the Accumulated Postretirement Benefit Obligation (APBO) by $4 thousand and claims and date experience, which (combined) decreased the APBO by $31 thousand. During 2021 the plan's total unrecognized net loss decreased by $79 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, 2021, the average future life expectancy of all plan participants was 6.0 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 2022 will depend on the 2022 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 2021, the unrecognized net loss decreased by 31% of the December 31, 2020 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 31:20212020
Discount rate
2.61%
3.33%
Expected return on plan assetsN/AN/A
Assumed rate of future compensation increaseN/AN/A
Health care cost trend: Initial
6.95% / 5.45%
6.95% / 5.45%
Health care cost tread: Ultimate
4.75% / 4.75%
4.75% / 4.75%
Year ultimate reached20262025

The following table presents the estimated benefit payments for each of the next five years and the aggregate amount expected to be paid in years six through ten (in thousands):
Calendar YearFuture Estimated Benefit Payments
2022$33 
2023$35 
2024$19 
2025$18 
2026$17 
2026-2030$64 

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 2022 is $33 thousand.

Executive Supplemental Pension Plan

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, 2021 and 2020.

The Corporation uses a December 31 measurement date for its Executive Supplemental Pension Plan.

The following table presents Executive Supplemental Pension plan status at December 31, 2021 and 2020 (in thousands):
Change in projected benefit obligation:20212020
Benefit obligation at beginning of year$1,251 $1,232 
Service cost— — 
Interest cost31 39 
Actuarial (gain) loss— 89 
Benefits paid(109)(109)
Projected benefit obligation at end of year$1,173 $1,251 

Changes in plan assets:20212020
Fair value of plan assets at beginning of year$— $— 
Employer contributions109 109 
Benefits paid(109)(109)
Fair value of plan assets at end of year$— $— 
Unfunded status$(1,173)$(1,251)
Amounts recognized in accumulated other comprehensive income (loss) at December 31, 2021 and 2020 consist of the following (in thousands):
 20212020
Net actuarial loss$339 $359 
Prior service cost— — 
Total before tax effects$339 $359 

Accumulated benefit obligation at December 31, 2021 and 2020 was $1.2 million and $1.3 million, respectively.

Weighted-average assumption for disclosure as of December 31:20212020
Discount rate2.87 %2.61 %
Assumed rate of future compensation increaseN/AN/A
Weighted-average interest crediting rateN/AN/A

The components of net periodic benefit cost for the years ended December 31, 2021 and 2020 are as follows (in thousands):
Net periodic benefit cost20212020
Service cost$— $— 
Interest cost31 39 
Recognized actuarial loss19 13 
Net periodic postretirement benefit cost$50 $52 

Other changes in plan assets and benefit obligation recognized in other comprehensive income (loss):20212020
Net actuarial (gain) loss$— $89 
Recognized actuarial loss(19)(13)
Total recognized in other comprehensive income (loss) (before tax effect)$(19)$76 
Total recognized in net benefit cost and other comprehensive income (loss) (before tax effect)$31 $128 

During 2021, there was a $24 thousand gain in the projected benefit obligation as a result of the increase in discount rate. Offsetting this was a mortality loss of $26 thousand. Other sources of gains/losses, including the update in mortality table, generated losses of less than 1% of expected year end obligations.
During 2021, the plan's total unrecognized net loss decreased by $20 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, 2022, the average future life expectancy of plan participants was 11.39 years.
Weighted-average assumptions for net periodic cost as of December 31:20212020
Discount rate2.61 %3.33 %
Expected asset returnN/AN/A
Assumed rate of future compensation increaseN/AN/A
Weighted-average interest crediting rateN/AN/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 2021 the unrecognized net loss decreased by 1.6% of the December 31, 2020 projected benefit obligation.

The following table presents the estimated benefit payments for each of the next five years and the aggregate amount expected to be paid in years six through ten for the Supplemental Pension Plan (in thousands):
Calendar YearFuture Estimated Benefit Payments
2022$108 
2023$106 
2024$103 
2025$99 
2026$95 
2027-2031$403 

The Corporation expects to contribute $110 thousand to the plan during 2022. 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.

Defined Contribution Supplemental Executive Retirement Plan

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, 2021 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, 2021 and 2020 was $2.4 million and $2.0 million, respectively. A total of $0.4 million was expensed during the years ended December 31, 2021 and 2020. 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.