Is this a mesh resolution issue?

Hi,

Here is a simplification of my problem. I have two concentric cylinders, one is hollow acts as a shell to the solid inner cylinder. The hollow cylinder is shrink fit onto the inner cylinder. I fix one end of both cylinders on their flat faces on the same side and use an upward displacement on the solid cylinder's other end. What I am trying to find is the point of bending at which the outer shell starts to peel away from the inner cylinder.

A problem that I am encountering is that even if I use a tiny displacement (in the real world I would not expect to see any seperation) the results claims that there is a gap. I've tried decreasing the size of my mesh in that area of interest and it still shows a gap. I am pretty sure that it is a resolution issue but I don't have a machine with the capabilities to handle such a large number of elements. What can I do? Does anyone else have this issue with shrink fit contact sets?

SolidworksSimulation