I took off the rear brake caliper this weekend. As pointed out by John O, a special tool is required to collapse the piston. The tool should be simple actually -- it has to turn and press the piston at the same time. However, you need quite a bit of force pressing in the piston. Because of the lack of a proper tool, I decided not to proceed further -- I just took it to the local Volvo specialist.
Anyway, after 20k mostly highway miles (in San Francisco Bay Area though) and with no hard braking, there was about 20-25% left on the rear brake pads. The front pads are still about 50%. When new the front and rear brake pads are the same thickness.
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