(11) PENSION PLAN AND OTHER BENEFIT PLANS

The Corporation has a noncontributory defined benefit pension plan covering substantially all employees. The

plan's defined benefit formula generally bases 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.

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

The Corporation amended the Defined Benefit Pension Plan during 2010. New employees hired on or after the

effective date will not be eligible to participate in the plan, however, existing participants at that time will

continue to accrue benefits. The amendment will result in a decrease over time in the future benefit obligations of

the plan and the corresponding net periodic benefit cost associated with the 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, 2011 and 2010:

Change in projected benefit obligation:	2011			2010
Benefit obligation at beginning of year	$	28,319,596		$	26,058,503
Service cost		993,364			903,538
Interest cost		1,569,151			1,516,817
Actuarial loss		2,940,942			1,039,616
Benefits paid		(1,297,020	)		(1,198,878	)
Benefit obligation at end of year	$	32,526,033		$	28,319,596

Change in plan assets:	2011			2010
Fair value of plan assets at beginning of year	$	29,846,889		$	28,725,380
Actual return on plan assets		(1,534,302	)		2,320,387
Employer contributions		8,000,000			-
Benefits paid		(1,297,020	)		(1,198,878	)
Fair value of plan assets at end of year	$	35,015,567		$	29,846,889

Funded status	$	2,489,534		$	1,527,293

Amount recognized in accumulated other comprehensive income at December 31, 2011 and 2010 consist of the

following:

	2011		2010
Net actuarial loss	$	15,834,042	$	9,724,844
Prior service cost		49,670		79,543
Total before tax effects	$	15,883,712	$	9,804,387

The accumulated benefit obligation at December 31, 2011 and 2010 was $27,490,715 and $24,011,722,

respectively.

The principal actuarial assumptions used in determining the projected benefit obligation as of December 31, 2011,

2010 and 2009 were as follows:

	2011			2010			2009
Discount rate		4.95	%		5.65	%		6.10	%

Assumed rate of future compensation increase		5.00	%		5.00	%		5.00	%

Components of net periodic benefit cost and other amounts recognized in other comprehensive income in 2011,

2010 and 2009 consist of the following:

Net periodic benefit cost	2011			2010			2009
Service cost, benefits earned during the year	$	993,364		$	903,538		$	876,063
Interest cost on projected benefit obligation		1,569,151			1,516,817			1,430,585
Expected return on plan assets		(2,340,373	)		(2,253,421	)		(1,833,928	)
Amortization of net loss		706,419			547,717			1,215,764
Amortization of prior service cost		29,873			45,890			88,669
Net periodic cost	$	958,434		$	760,541		$	1,777,153

Other changes in plan assets and benefit obligations recognized in other comprehensive income:	2011			2010			2009
Net actuarial loss(gain)	$	6,815,617		$	972,650		$	(4,696,798	)
Recognized loss		(706,419	)		(547,717	)		(1,215,764	)
Amortization of prior service cost		(29,873	)		(45,890	)		(88,669	)
Total recognized in other comprehensive income (loss) (before tax effect)	$	6,079,325		$	379,043		$	(6,001,231	)
Total recognized in net benefit cost and other comprehensive income (loss) (before tax effect)	$	7,037,759		$	1,139,584		$	(4,224,078	)

Amounts expected to be recognized in net periodic cost during 2012
Loss recognition	$	1,283,297
Prior service cost recognition		13,856

The principal actuarial assumptions used in determining the net periodic benefit cost for the years ended

December 31, 2011, 2010 and 2009 were as follows:

	2011			2010			2009
Discount rate		5.65	%		6.10	%		5.75	%
Expected long-term rate of return on assets		8.00	%		8.00	%		8.00	%
Assumed rate of future compensation increase		5.00	%		5.00	%		5.00	%

The Corporation changes important assumptions whenever changing conditions warrant. 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. Other material assumptions include the compensation increase rates, rates of

employee terminations, and rates of participant mortality.

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 2011, the Corporation may

make changes at any time.

The expected return on plan assets was determined based on a Capital Asset Pricing Model ("CAPM") using

historical and expected future returns of the various asset classes, reflecting the target allocations described below.

Asset Class	Target Allocation 2011			Percentage of Plan Assets at December 31,						Weighted-Average Expected Long-Term Rate of Return
				2011			2010
Large Cap Domestic Equities		30% - 60	%		45	%		59	%		10.3	%
Mid-Cap Domestic Equities		0% - 20	%		2	%		3	%		10.6	%
Small-Cap Domestic Equities		0% - 15	%		4	%		5	%		10.8	%
International Equities		0% - 25	%		0	%		0	%		10.3	%
Intermediate Fixed		20% - 50	%		20	%		28	%		4.7	%
Income
Cash		0% - 20	%		29	%		5	%		4.0	%
Total					100	%		100	%		8.35	%

The above table December 31, 2011 actual cash exceeds the target allocation due to an $8,000,000 contribution

made by the Corporation to the plan during the last week of December 2011.

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 Investment Policy Statement ("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, 2011 and 2010, 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, 2011 and 2010, by asset class are as follows:

			Fair Value Measurement at December 31, 2011 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	$	10,093,337	$	10,093,337	$	-	$	-
Equity securities:
U.S. companies		16,625,059		16,625,059		-		-
International companies		643,118		643,118		-		-

Mutual Funds		2,109,877		2,109,877		-		-

Debt securities:
U.S. Treasuries/Government bonds		2,410,971		2,410,971		-		-
U.S. Corporate bonds		2,865,173		-		2,865,173		-
Foreign bonds, notes & debentures		268,032		-		268,032		-
Total plan assets	$	35,015,567	$	31,882,362	$	3,133,205	$	-

			Fair Value Measurement at December 31, 2010 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	$	1,475,139	$	1,475,139	$	-	$	-
Equity securities:
U.S. companies		19,108,851		19,108,851		-		-
International companies		1,023,762		1,023,762		-		-

Mutual Funds		2,262,369		2,262,369		-		-

Debt securities:
U.S. Treasuries/Government bonds		2,791,098		2,288,688		502,410		-
U.S. Corporate bonds		2,927,245		-		2,927,245		-
Foreign bonds, notes & debentures		258,425		-		258,425		-
Total plan assets	$	29,846,889	$	26,158,809	$	3,688,080	$	-

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:

Calendar Year	Future Expected Benefit Payments
2012	$	1,374,338
2013	$	1,441,069
2014	$	1,538,744
2015	$	1,635,835
2016	$	1,768,361
2017-2021	$	10,317,784

The Corporation does not expect to contribute to the plan during 2012. 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.

The Corporation also sponsors a defined contribution profit sharing, savings and investment plan which covers all

eligible employees with a minimum of 1,000 hours of annual service. The Corporation makes discretionary

matching and profit sharing contributions to the plan based on the financial results of the Corporation. Expense

under the plan totaled $331,689, $332,133, and $315,731 for the years ended December 31, 2011, 2010 and 2009,

respectively. The plan's assets at December 31, 2011 and 2010, include 191,393 and 185,692 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.

The Corporation also contributed $40,930 at December 31, 2011 to a non-discretionary 401K plan which covers

all eligible employees hired after July 1, 2010.

The Corporation sponsors a defined benefit health care plan that provides postretirement medical benefits to

employees who meet minimum age and service requirements. Postretirement life insurance benefits are also

provided to certain employees who retired prior to July 1981. This plan was amended effective July 1, 2006. Prior

to this amendment, all retirees age 55 or older were eligible for coverage under the Corporation's self-insured

health care plan, contributing 40% of the cost of the coverage. Under the amended plan, coverage for Medicare

eligible retirees who reside in the Central New York geographic area is provided under a group sponsored plan

with Excellus BlueCross BlueShield called Medicare Blue PPO, with the retiree paying 100% of the premium.

Excellus BlueCross BlueShield assumes full liability for the payment of health care benefits incurred after July 1,

2006. Current Medicare eligible retirees who reside outside of the Central New York geographic area were

eligible for coverage under the Corporation's self insurance plan thru December 31, 2009, contributing 50% of

the cost of coverage. Effective January 1, 2010, these out of area retirees were eligible for coverage under a Medicare

Supplement Plan C administered by Excellus BlueCross BlueShield, contributing 50% of the premium. Current

and future retirees between the ages of 55 and 65, will continue to be eligible for coverage under the Corporation's

self insured plan, contributing 50% of the cost of the coverage. Employees who retire after July 1, 2006, and

become Medicare eligible will only have access to the Medicare Blue PPO plan. Additionally, effective July 1,

2006, dental benefits were eliminated for all retirees.

The Corporation uses a December 31 measurement date for its postretirement medical benefits 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, 2011 and 2010:

Changes in accumulated postretirement benefit obligation:	2011			2010
Accumulated postretirement benefit obligation at beginning of year	$	1,315,379		$	1,365,104
Service cost		35,000			33,000
Interest cost		72,000			75,000
Participant contributions		57,847			67,792
Actuarial loss		19,705			49,341
Benefits paid		(108,109	)		(274,858	)
Accumulated postretirement benefit obligation at end of year	$	1,391,822		$	1,315,379

Change in plan assets:	2011			2010
Fair value of plan assets at beginning of year	$	-		$	-
Employer contribution		50,262			207,066
Plan participants' contributions		57,847			67,792
Benefits paid		(108,109	)		(274,858	)
Fair value of plan assets at end of year	$	-		$	-


Funded status	$	(1,391,822	)	$	(1,315,379	)

Amount recognized in accumulated other comprehensive income at December 31, 2011 and 2010 consist of the following:

	2011			2010
Net actuarial loss	$	41,970		$	22,265
Prior service benefit		(822,000	)		(919,000	)
Total before tax effects	$	(780,030	)	$	(896,735	)

Weighted-average assumption for disclosure as of December 31,:	2011			2010			2009
Discount rate		4.95	%		5.65	%		6.10	%
Health care cost trend: Initial		10.00	%		14.00	%		15.00	%
Health care cost trend: Ultimate		5.00	%		5.00	%		5.00	%
Year ultimate cost trend reached		2018			2020			2020

The components of net periodic postretirement benefit cost for the years ended December 31, 2011, 2010 and

2009 are as follows:

Net periodic benefit cost	2011			2010			2009
Service cost	$	35,000		$	33,000		$	29,000
Interest cost		72,000			75,000			75,000
Amortization of prior service benefit		(97,000	)		(97,000	)		(97,000	)
Net periodic postretirement cost	$	10,000		$	11,000		$	7,000

Other changes in plan assets and benefit obligations recognized in other comprehensive income:	2011		2010		2009
Net actuarial loss	$	19,705	$	49,341	$	23,848
Amortization of prior service benefit		97,000		97,000		97,000
Total recognized in other comprehensive income (before tax effect)	$	116,705	$	146,341	$	120,848

Total recognized in net benefit cost and other comprehensive income (before tax effect)	$	126,705	$	157,341	$	127,848

During 2011, the plan's total unrecognized net loss increased by $20 thousand. Because the total unrecognized net

gain or loss is less than 10% of the accumulated postretirement benefit obligation no amortization is anticipated in

2012. Actual results for 2012 will depend on the 2012 actuarial valuation of the plan.

Amounts expected to be recognized in net periodic cost during 2012:
Gain recognition	$	-
Prior service cost recognition	$	(97,000	)

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plan. A

one-percentage point change in assumed health care cost trend rates would have the following effects:

Effect of a 1% increase in health care trend rate on:	2011		2010		2009
Benefit obligation	$	10,000	$	10,000	$	8,000
Total service and interest cost	$	700	$	300	$	500

Effect of a 1% decrease in health care trend rate on:	2011			2010			2009
Benefit obligation	$	(11,000	)	$	(12,000	)	$	(8,000	)
Total service and interest cost	$	(500	)	$	(1,000	)	$	(500	)

Weighted-average assumptions for net periodic cost as of December 31,:	2011			2010			2009
Discount rate		5.65	%		6.10	%		5.75	%
Health care cost trend: Initial		14.00	%		15.00	%		8.50	%
Health care cost tread: Ultimate		5.00	%		5.00	%		4.50	%
Year ultimate reached		2020			2020			2017

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:

Calendar Year
2012	$	145,000
2013	$	140,000
2014	$	110,000
2015	$	119,000
2016	$	132,000
2017-2021	$	626,000

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 2012 is $145,000.

The Corporation also sponsors an Executive Supplemental Pension Plan for certain current and 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, 2011 and 2010.

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, 2011 and 2010:

Change in benefit obligation:	2011			2010
Benefit obligation at beginning of year	$	989,053		$	946,781
Service cost		30,625			30,113
Interest cost		53,771			55,474
Actuarial loss		70,771			31,415
Benefits paid		(74,730	)		(74,730	)
Projected benefit obligation at end of year	$	1,069,490		$	989,053

Changes in plan assets:	2011			2010
Fair value of plan assets at beginning of year	$	-		$	-
Employer contributions		74,730			74,730
Benefits paid		(74,730	)		(74,730	)
Fair value of plan assets at end of year	$	-		$	-


Unfunded status	$	(1,069,490	)	$	(989,053	)

Amounts recognized in accumulated other comprehensive income at December 31, 2011 and 2010 consist of the

following:

	2011		2010
Net actuarial loss	$	226,471	$	165,166
Prior service cost		-		-
Total before tax effects	$	226,471	$	165,166

Accumulated benefit obligation at December 31, 2011and 2010 was $1,004,803 and $938,053, respectively.

Weighted-average assumption for disclosure as of December 31,:	2011			2010			2009
Discount rate		4.95	%		5.65	%		6.10	%

Assumed rate of future compensation increase		5.00	%		5.00	%		5.00	%

The components of net periodic benefit cost for the years ended December 31, 2011, 2010 and 2009 are as follows:

Net periodic benefit cost	2011		2010		2009
Service cost	$	30,625	$	30,113	$	26,767
Interest cost		53,771		55,474		52,826
Recognized actuarial loss		9,466		5,582		7,235
Net periodic postretirement benefit cost	$	93,862	$	91,169	$	86,828

Other changes in plan assets and benefit obligation recognized in other comprehensive income:	2011			2010			2009
Net actuarial loss (gain)	$	70,771		$	31,415		$	(14,158	)
Recognized actuarial loss		(9,466	)		(5,582	)		(7,235	)
Total recognized in other comprehensive income (before tax effect)	$	61,305		$	25,833		$	(21,393	)


Total recognized in net benefit cost and other comprehensive income (before tax effect)	$	155,167		$	117,002		$	65,435

Amounts expected to be recognized in net periodic cost during 2012:
Loss recognition	$	19,920

Prior service cost recognition	$	-

Weighted-average assumptions for net periodic cost as of December 31,:	2011			2010			2009
Discount rate		5.65	%		6.10	%		5.75	%

Salary scale		5.00	%		5.00	%		5.00	%

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:

Calendar Year	Future Estimated Benefit Payments
2012	$	75,000
2013	$	75,000
2014	$	75,000
2015	$	75,000
2016	$	75,000
2017-2021	$	531,000

The Corporation expects to contribute $75,000 to the plan during 2012. Corporation contributions are equal to the

benefit payments to plan participants.