Lawmakers question biggest UK pensions over climate change risks

* Top 25 schemes asked to explain in lawmaker letter

* Schemes manage more than 550 bln stg in assets

* Government letter shows trustees still unsure on duty

By Simon Jessop and Carolyn Cohn

LONDON, March 5 (Reuters) - Britain's biggest pension funds have been asked by lawmakers to explain how they are managing the impact of climate change risks on their investments.

"We want to know what pension funds are doing to safeguard people's pensions from the financial risks of climate change," Mary Creagh, Chair of the Environmental Audit Committee, said.

The request follows growing pressure from policy-makers across the world for investors to do more to manage and mitigate the risks of environmental change.

The 25 largest schemes, which collectively manage more than 550 billion pounds ($760 billion) in assets, include those managing retirement savings for the country's universities as well as staff at BT and HSBC.

Pension fund investments in insurance companies could be at risk as insurers face higher pay-outs and investments in energy companies relying on fossil fuels could lose value as the world seeks to meet commitments to keep global warming, Creagh said in a statement.

Creagh asked in the letter if climate change risk was being considered by pension schemes at board level and what investment strategy changes they schemes were making.

In a separate letter, also published on Monday, the Department for Work and Pensions said there was still "widespread misunderstanding" on the part of pension scheme trustees on their duty in relation to environmental risks.

Luke Hildyard, policy lead for stewardship and corporate governance at the Pensions and Lifetime Savings Association, said the threat to pension fund investments from the economic impact of climate change was "definitely an issue that trustees should be making time to discuss and seeking advice on".

($1 = 0.7236 pounds) (Additional reporting by Andy Bruce Editing by Alexander Smith)