settled status and competent state - stupid question time!

Im fairly certain what the answer will be for this, but I just want to make sure im not missing anything:

Bulgarian national receiving pension from Bulgaria; living in UK with settled status. She gets a small amount of pension credit but nothing else., and no state pension from UK. She has applied for AA and has been refused on the grounds that Bulgaria is competent state - and I cant see anything to argue really. (im told Bulgaria doesnt have an equivalent that would apply to this lady)

My thoughts are that as indefinite leave to remain is not an EEA status but one that applies to third country nationals - nothing to do with freedom of movement and more to do with Immigration, does this trump the EEA stuff (probably doesnt as I guess it is effectively the same argument as Fratila) but you could have an Indian national with ILTR who has a pension from India and would be fine to claim AA; but an EEA national with an EEA pension cannot claim AA? 

I guess the only way around this is to apply for British nationality? (not that im advising this….) sorry for the stupid question but just food for thought I guess ....