Key Points:

The Government will not guarantee the money people put into their KiwiSaver accounts, meaning savers drawn by the scheme's incentives carry the same risk as if they had invested in many other superannuation schemes.

KiwiSaver starts on July 1, and the incentives detailed in Thursday's Budget mean the scheme has suddenly captured the attention of many New Zealanders.

As they consider whether to join, debate over the scheme yesterday turned toward the risk that savers face, and whether it might be better for them to pay off debt first.

Economist Gareth Morgan said investors who sign up to KiwiSaver would not have any Government guarantee on their money.

It could be increased, reduced or even lost completely, as with any other managed fund investment.

"If the provider isn't up to scratch with the returns, or worse loses your money, well tough," Mr Morgan told Radio New Zealand.

Finance Minister Michael Cullen said the risk of losing some money was no different to any other investment, which always carried risk.

"No managed fund which is soundly based has fallen over completely," he said.

It would be "an absurd thing" for the Government to guarantee KiwiSaver money.

A guarantee would expose the Government to risk and lead to "moral hazard risk".

"If you're an investment fund that's got a Government guarantee, why should you be careful about how you invest?"

Dr Cullen said Mr Morgan's talk about a guarantee was "a wee bit naughty" as the economist was going to be offering a KiwiSaver scheme.

Under KiwiSaver, a person chooses to put aside 4 per cent or 8 per cent of their gross income, and that money is put into an investment fund.

Savers will be able to choose their fund manager, and decide whether they want a low, medium or high risk investment.

The Retirement Commission is updating an online tool to help people decide whether KiwiSaver is for them.

Retirement Commissioner Diana Crossan said people needed to take a close look at their current situation before looking at the future.