A senior mayoral aide yesterday blasted Comptroller John Liu’s oversight of the city pension funds, saying they were neither diversified enough nor producing high-enough returns.

In a speech before the Citizens Budget Commission, Deputy Mayor Robert Steel challenged Liu’s recent “promotional news” release announcing that the five funds had thrown off a 20 percent return over the last fiscal year.

“In fact, over this same period, when we earned 20 percent, the S&P was up over 30 percent,” Steel said. “So while 20 percent is an attractive number, when you compare it to what we should or would want to be achieving, it certainly seems to be a little bit light.”

The funds are worth about $120 billion. Steel proposed sweeping changes to upgrade their management, professionalism and diversity — including moving some assets from US to international equities.

Liu’s office responded by noting that many of the changes on Steel’s list had been put forth “months ago” by the comptroller.