The federal government has started issuing tens of thousands of cheques to current and retired public servants as part of the $3.6 billion pay equity settlement.

Most public servants haven't yet received their cheques. But those who have are elated.

At Foreign Affairs, Heather Barr is happy to show off her first pay equity cheque.

She won't reveal the amount, but she's "very, very happy".

Barr knows she's not alone. "I think everyone else in the department of Foreign Affairs and International Trade is definitely happy. I can see the smiling faces today."

Barr's department is one of the first to get the pay equity cheques out to its workers.

Cheques for most other government employees are now working their way through departmental distribution channels.

Marjolaine Roi at Statistics Canada says, "They're going to release it next week, Tuesday or Wednesday; something like that."

When everyone gets their cheques there may not be the big boom in car sales and other consumer spending that everyone anticipated.

That's because many public servants are concerned about the tax implications of getting those big cheques.

Union president Darryl Bean explains that these are "people who are normally in the $30,000 bracket. All of a sudden, for a year, they're going to be the in the $60,000 or $70,000 bracket, or higher."

Instead of rushing out to buy cars, most of the public servants we spoke to plan to invest the money in retirement savings plans.

Heather Barr, for instance, is putting hers in "RRSPs, and RESPs for the children, and that will help them down the line."

The tax issue wouldn't be as serious if the government had given public servants the option of getting the money over several years.

But Darryl Bean says the Treasury Board refused to do it that way.

"They decided, I assume for administrative purposes, that they wanted to complete the payments in the one year period."

The cheques out this month are the first of five sets being issued to cover different aspects of the pay equity settlement.