As an incentive to retire, add 5 years to the number of years of government service used to compute the retirement annuity. An employee would need to be age eligible to take advantage of this offer. Retain the annuity cap.
The purpose would be to reduce the number of high paid older employees and because of this voluntary attrition of the workforce, and if necessary, they can be replaced with younger lower paid employees.
It would be hoped that Government agencies would use this opportunity to reduce the size of the Government and in turn reduce the cost of Government. This is a better alternative to sequestration.