Pinion Location in Banjo

[flathead34]

I installed my restored pinion assembly into my '35 banjo. There is about a an1/8" gap between the pinion and the banjo housing. The pinion is all the way through the pilot bearing. Will this gap be a problem ?? The race is down into the banjo as far as it will go and into the banjo housing These pictures will show the end of the pinion gear and this gap. It shows up in the picture as being bright. Any help or suggestions will be appreciated. Thanks Mike