The answer is that you cannot be treated as a "joint" taxpayer for income tax purposes. As has been said you have your own personal allowance and that is that. Your wife's allowance is, effectively, lost.
Of course had you spent your life peeing all your spare cash up the wall and had no other income apart from a State "pension" (which would not be a pension at all but simply retirement age benefits) you would be entitled to a higher rate of income from the State as would your wife. And all your income would be tax free whereas, as you have discovered, your Stae pension forms part of your taxable income.
However, all is not lost. Mr Cameron is, it is said, about to fulfil one of his election promises. If the measure is passed (by no means a certainty as there are already cries of "unfair") your wife would be able to transfer a whole £750 of her £10k allowance to you, thus reducing your annual tax bill by a massive £150. Still, mustn't grumble, eh!?